Bitfinex Starts Initial Exchange Offerings (IEOs) Amid Liquidity Uncertainty
The exchange joins the IEO token sale model just days after launching its native token, LEO, to boost liquidity.
Bitfinex joins the IEO token sale model with its proprietary platform, Tokinex, as announced on social media. Bitfinex is late to the IEO party and only launched Tokinex after issuing its native token, LEO, to ensure liquidity.
“Tokinex allows qualified users to discover and participate in carefully curated, pre-vetted token sales from new and exciting projects in the crypto space,” announced Bitfinex.
The first token sale is expected later on Wednesday, with users urged to complete a know-your-customer (KYC) procedure with the BlockPass app before registering for tokens. Bitfinex has promised to immediately list the successful IEOs.
The Tokinex platform arrives at a time when Bitfinex and Tether, both related to the iFinex company, are fighting for their reputation. During the investigations into Tether, Inc., suggestions were made that some of the USDT available was used to buy and sell Bitcoin (BTC).
Traders saw this as a deliberate attempt to hurt Bitfinex market participants by exceeding influence and forced order liquidations.
Additionally, a court transcript acquired by The Block shows the Tether lawyers attempting to explain the lack of backing for each USDT as a form of “fractional banking”. The problem is, Tether does not have the same trust assigned to banking institutions, and traders may decide to abandon confidence in the stablecoin at any moment. So far, this has not happened, but for some, it is a constant looming threat for cryptocurrency prices. At the moment, USDT trading makes up a significant portion of trades for both Bitcoin (BTC) and major altcoins.
The native LEO token for Bitfinex is also performing poorly. After allegedly raising $1 billion within days, the LEO asset is trading sluggishly, with low volumes and a falling price.
The price hovers around $1, while others notice that the IEO was in fact mostly backed by iFinex itself, in essence shedding USDT and transfering the liquidity risk to LEO.
In the meantime, the supply of USDT has grown through new issues and emptying out the treasury, to above 2.92 billion coins, and volumes are near the peak at $23 billion’s equivalent in 24 hours.