Bitfinex Seeks Private Investors for LEO Token; White Paper Reveals More Details
The exchange released the white paper for its intended initial exchange offering (IEO) which will run until May 11.
Bitfinex has only a few more days to offer LEO, at least according to a recently released white paper. Bitfinex aims to raise $1 billion, with the intention to collect as much as possible during the initial exchange offering (IEO) until May 11. Afterward, the exchange will sell LEO tokens in an ad hoc manner to raise funds.
The IEO decision was made after it came to light that Bitfinex has $850 million of its funds blocked by financial regulators in Poland, Panama and the USA. At the same time, the exchange may not have immediate access to funding from Tether, Inc., despite signing an agreement for a $900 million credit line.
Thus, in case Bitfinex recovers the funds locked due to investigations against CryptoCapital, this will lead to an immediate burn of LEO tokens. In other cases, Bitfinex will use its earnings to burn LEO over the course of a few years.
“On a monthly basis iFinex and its affiliates will buy back an amount of LEO from the market equal to a minimum of 27% of the consolidated gross revenues of iFinex from the previous month, in perpetuity until no tokens are in commercial circulation,” the White Paper states.
Unlike IEOs for selling utility tokens or offering up small amounts to retail investors, Bitfinex encourages large-scale buyers. In the past weeks, rumors surfaced of Bitfinex managing to get pledges from large-scale individual investors. A specific peer-to-peer market between LEO and USDT will be opened, to allow for private investors to switch between the dollar-pegged stablecoin and the new asset. The nominal price of LEO at the intended IEO offering will be also $1.
Bitfinex is not advertising the token sale through social media, and has restricted the sale to users only outside the USA.
The Bitfinex IEO was viewed with skepticism, as a blatant attempt for the exchange to bail itself out. The market operator also revealed that the current withdrawals of Bitcoin (BTC) is not a panic run, but a movement of coins to new cold wallets.