Bitfinex May Attempt to Secure Liquidity with LEO Token in Upcoming IEO

Allegedly, Bitfinex has already secured significant funds to compensate for locked liquidity, planning a massive $1 billion token sale.

After a week of rumors, it became clear Bitfinex is serious about its initial exchange offering (IEO), aimed at raising as much as $1 billion in a mix of private investments and a crowdsale. The sale of the LEO token arrived as it became clear that Bitfinex was having liquidity problems after some of its funds were locked in relation to the activity of Crypto Capital, the payment processing company.

As investor Dong Zhao revealed, there is a document outlining the parameters of the sale for the new token.

https://twitter.com/zhaodong1982/status/1124688103313002497?s=12

LEO tokens will be used within the Bitfinex ecosystem, bringing reduced trading fees. In the coming months and years, the tokens will be burned as a way of distributing the net earnings of the exchange.

However, nothing is mentioned about the possibility of finding a reliable banking partner, where fiat funds would be safe and withdrawals would happen in a timely fashion. In theory, the funds held in relation to the activity of Crypto Capital may be returned, but for now, they remain unavailable to Bitfinex.

Later, Tether admitted that the stablecoin was no longer backed 1:1 with dollars, but only up to 74% of its value. Since USDT increased its circulation by around 800 million coins in April 2019, in effect the markets have absorbed the partially-backed coins, leaving traders to fill up the missing value.

In the past, Bitfinex has plugged a liquidity hole by issuing BFX tokens, to compensate for the theft of more than 744,000 Bitcoin (BTC) back in 2016. Trading fees and windfall earnings have led to compensating at least some of the value for those tokens.