Hong Kong-based crypto exchange Bitfinex is looking to raise $1 billion in an IEO, writes The Block:
Crypto exchange Bitfinex will conduct an initial exchange offering (IEO), aiming to raise $1 billion, according to details from an upcoming white paper reviewed by The Block. The final version of the white paper is still under review.
Bitfinex’s exchange tokens, dubbed LEO, would first be offered to private investors, then subsequently opened to the public after May 10 if there is any allocation left, according to the information shared by shareholder Zhao Dong. According to Zhao Dong, Bitfinex has already raised $600 million in private, verbal commitments. Since last week, it has been rumored that Bitfinex would raise money via an IEO, a red-hot fundraising mechanism that allows crypto firms to sell tokens on an exchange to raise cash.
Funds gathered from the offering will be used to cover the $850 million in frozen funds tied to crypto processing company and alleged money laundering op Crypto Capital. Bitfinex is “confident that it will retrieve these funds” and it plans to use at least 95% of it to redeem and burn the LEO in an equivalent amount. Failing that, the company plans to buy back the tokens on a monthly basis with at least 27% of its previous month’s profit. Zhao Dong calculates that even if they don’t recover the frozen funds, they’ll be able to purchase all the tokens within four years.
Forbes notes that this isn’t the first time Bitfinex solved “liquidity” problems by issuing tokens; after having roughly $72 million worth of bitcoin stolen back in 2016, the company announced a token-for-equity exchange to make up for it. Reports conflict whether or not they recovered the funds, but Bitfinex redeemed all the tokens using profits by April 2017.
At any rate, Zhao Dong is reportedly taking pre-orders for those interested in joining the public phase of the fund raise, though scammers seem to be joining in on the fun as well.
Photo: Ervins Strauhmanis