Social media platform Twitter is filled with references about a $1 billion token offering from cryptocurrency exchange Bitfinex. The company has been rubbing shoulders with authorities in New York about an alleged covering of $850 million of losses.
Bitfinex Is Planning an Initial Exchange Offering
Even after Bitfinex allegedly misguided its users about a lost $850 million, the company is planning to create an Initial Exchange Offering (IEO). The exchange is eyeing a $1 billion fundraise from investors.
The buzz on Twitter even led to the famous crypto bull and Fundstrat Global Advisor co-founder Thomas Lee to say that the token sale is already oversubscribed. Interestingly, IFinex Inc., a Hong Kong-based company that owns and controls both Bitfinex and the Tether hasn’t confirmed the IEO yet. Lee also said that he isn’t sure if the offering exists.
According to speculations, the company will raise the money in Tether (USDT), its dollar-pegged stablecoin. This fundraising will help in replenishing the company’s cash reserves. Note that Tether is already in trouble for saying that cash reserves back only 74% of its outstanding coins. As a stablecoin, Tether must ideally keep 100% of its outstanding coins backed by cash.
What Happens If the IEO Takes Place?
According to Arca Funds’ chief investment officer Jeff Dorman:
“If Bitfinex successfully raises this capital, and all signs thus far point to them succeeding, investors in these new LEO tokens will likely be rewarded. With the capital hole filled, Bitfinex and Tether will likely continue to operate with a well-deserved reputational black eye.”
The chief technology officer of Bitfinex tweeted “LEO,” which is being touted as the name for the new token on May 5. It was retweeted by the exchange’s official account as well. Despite all the speculations, the company spokesman Kasper Rasmussen has remained tight-lipped about their plans for the IEO.
Dorman commented on the silence, saying that a lot of people want the company to fail to remove the unregulated exchange and its related stablecoin from the market. However, he noted that people eventually move on from scandals and if a company continues to remain solvent, it continues to operate.
Bitfinex isn’t new to controversies. The exchange has previously been linked to Bitcoin price manipulation alongside Tether. It has strongly denied all such allegations and noted that it plays no role in deciding the price of Bitcoin.