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iFinex, the parent company to Tether and the controversial cryptocurrency exchange Bitfinex, is planning an initial exchange offering (IEO) with the aim to raise $1 billion.
Bitfinex has come under scrutiny recently after it was revealed the FBI is conducting an investigation into an $850 million cover-up. Bitfinex has also been criticized for its lack of clarity over how Tether is backed. Bitfinex once claimed that Tether was backed 1:1 by the US dollar, but quietly changed their statement recently to say that Tether is backed by a variety of assets.
The news of the upcoming IEO broke on Twitter on May 4 after the company’s shareholder and Chinese billionaire Zhao Dong shared an excerpt of a marketing paper; however, this isn’t the final version of the document and changes may still happen. The document isn’t technically a whitepaper (although some have labeled it as such) in that it lacks specific technical details such as on which blockchain the new cryptocurrency will trade and technical details surrounding the coding.
These Bitfinex’s tokens would be offered to private investors before being offered to the public on May 10, if any tokens remain. Bitfinex Chief Technology Officer Paolo Arduino confirmed earlier that the token is called LEO. The document shared by Zhao Dong states that:
“The tokens will be sold in a private offering without the means of general solicitation or general advertising. Any tokens that remain issued may be sold in the manner and times determined by the Issuer in its sole discretion.”
Zhao Dong is a crypto enthusiast, Bitfinex shareholder and longtime supporter of the company. He was recently reported as saying that he was “fortunate to become a Bitfinex Shareholder” and that the company will survive.
There is speculation in the industry that this token sale isn’t solely motivated by crypto motivation but rather in response to Bitfinex’s damaged reputation since the FBI has frozen several financial accounts used by the company. Bitfinex claims that the marketing document is “actively collaborating with the legal investigation and applying to unfreeze these funds through legal procedures,” and they are confident that they will receive these funds.
The new tokens will be bought back monthly at market price with at least 27% of the company’s profit from the previous month. LEO token holders will also have access to a 15% discount on taker fees for crypto to crypto trading as well as a discounted lending rate and a discount on withdrawal fees.