Bitfinex launches whitepaper for imminent IEO; looks to retrieve funds to make up for $850M loss

Bitfinex will roll out their Initial Exchange Offering [IEO], which is expected to reel-in in a whopping $1 billion. This follows the recent news of the Hong Kong exchange trying to cover up their undisclosed loss of close to $850 million.

According to the exchange’s shareholder Zhao Dong, Bitfinex has formally rolled out its IEO whitepaper. The tokens issued in light of the IEO are titled LEO and would be tabled before private investors prior to public offerings post-May 10.

The exchange has already raised $600 million in private investment, however, the same is not mentioned in the paper and is based on verbal confirmations, added Dong.

Earlier this week, Dong revealed via WeChat that the exchange was in the process of coming out with an IEO. He added that interested parties, if willing to participate in the offering, should reach out to him or DFund.

Unsurprisingly, the exchange launching an IEO at this juncture is due to the New York Attorney General suing the exchange for hiding undisclosed losses and using their held Tether [USDT] reserves to cover up a $850 million loss. The aforementioned sum is frozen and locked in a number of accounts that are under the control of Crypto Capital, a payment processing company.

Despite the speculation, Bitfinex stated that it is “confident that it will retrieve these funds” not specifying that the IEO was the sole way for the same. The exchange added, in the whitepaper, that it is,

“Actively collaborating with the legal investigation and applying to unfreeze these funds through legal procedures.”

In terms of the formalities within the IEO, the whitepaper stated that the tokens would be bought back from hodlers on a monthly system at the prevailing market price. The funds that would be used for the re-purchase would be Bitfinex’s previous month profits. Additionally, even with an 18-month period, the exchange has the right to buy back the tokens.

The $850 million frozen funds, which the exchange claims, has been locked up by the regulatory authorities of the United States, Portugal, and Poland, will be used up, almost in full, to burn the LEO tokens, if unfrozen by the authorities. However, if the account is not “unfrozen”, Dong claims that the exchange will take around four years to buy back all the tokens, based on the exchange’s 2017 and 2018 profit projections.

Despite the overarching news of the Bitfinex cover-up leading to the IEO, the exchange also claims its 2016 hack as being another reason to engage in tokenization. The exchange was hacked for over $60 million or 119,756 BTC in August 2016, which was the second biggest hack since Mt. Gox.

If some of these Bitcoins are retrieved by the exchange, over 80 percent of the same would be used to buy back the tokens.

The post Bitfinex launches whitepaper for imminent IEO; looks to retrieve funds to make up for $850M loss appeared first on AMBCrypto.

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