By
Bena Ilyas
April 24th, 2024
After the latest seizure of funds by the NYAG office, Bitfinex is looking for ways to recover the funds. Conducting and IEO and issuing a native exchange token is one of the probable options.
Popular Hong Kong-based cryptocurrency exchange Bitfinex is reportedly planning a fundraiser of $1 billion worth of Tether (USDT) tokens to issue its proprietary exchange token. Dovey Wan – a Bitfinex stakeholder and also a popular OTC trader in China tweeted on this development.
BREAKING and WTF 🤯🤯🤯🤯
Bitfinex is planning on a exchange token sale + IEO… plan to raise $1B in $USDT….
This is really a WTF situation 🤦🏻♀️🤦🏻♀️
— Dovey "Rug The Fiat" Wan (@DoveyWan) April 29, 2019
As we can see from Dovey’s tweet that Bitfinex will leverage the latest fundraising method of Initial Exchange Offering (IEO). Although the details for this plan are not 100% confirmed, Dovey wrote:
“Folks are selling the allocation of its IEO in a few channels, I was super skeptical at first but later confirmed by one of BFX equity shareholders”.
This news comes just at a time when Bitfinex is facing severe charges of covering its $850 million through the secret use of customer funds. The New York State Attorney General has charged Bitfinex of arranging $900 million from its affiliate company Tether. Tether is the popular stablecoin operator of the dollar-pegged USDT tokens.
Bitfinex has claimed that its $850 million worth funds have been “seized” by the authorities and it is now looking at ways to retrieve the funds.
Raising Funds Through Token Issuance
Zhao, the founder of the blockchain investment firm DGroup suggest Bitfinex of the token issuance plan. After the recent allegations on Bitifinex put by NYAG’s office, Zhano on his Weibo account said that Bitfinex should take the opportunity to issue tokens worth $850 million to recover the frozen funds.
Speaking to CoinDesk, Zhao said that the advantage to the users is “exchange tokens have better liquidity. They are the only real token that is not a shitcoin.” He further added that “The issuance method could be similar to that of other exchange tokens, which were distributed through pre-paid trading fee packages”.
Zhao also extended his support saying that he would try his best to crack the deal. The suggestion made by Zhao has received a mixed response from the Weibo’s crypto community. Some members expressed skepticism on whether Bitfinex can actually recover the frozen funds. One of the users commented:
“Didn’t Bitfinex say [there] are certain the funds can be recovered? If so, then no other plans are needed. But if they issue tokens to swap debts to shares, that could mean those funds are really gone and could lower the platform’s credibility.”
Dovey Wan has also pointed at some inconsistencies on the public information available on Bitfinex and Tether. In another tweet, Wan notes that “if the $850 million can be easily crawled back, then why [would it do] initial exchange offering?” and “if Bitfinex is highly cash flow positive, why borrowed from Tether?”