Embattled cryptocurrency exchange Bitfinex raised $1 billion in 10 days with an initial exchange offering (IEO), money it hopes will alleviate concerns of its financial stability.
Bitfinex CTO Paolo Ardoino tweeted Monday that private firms, both inside the cryptocurrency sector and out, had contributed more than $100 million each throughout the fundraising.
A “legion” of individuals who made investments over $1 million were also said to have bought tokens, which are intended to be redeemable for Tether tokens.
Why? Because they know we are trustworthy, they recognize what we have been doing (without needing us bragging about it publicly) and they want us keep fighting for the industry whole. Their own words.
Thank you everyone for the amazing support we got. We are impressed. $LEO
— Paolo Ardoino (@paoloardoino) May 13, 2019
“There is a small allocation left and we just prefer to share to small investors until there is time,” said Ardoino. “We have a request from few big buyers to buy the few millions left once we close it, [b]ut we believed it’s more fair to give opportunity to a larger audience.”
Bitfinex’ plans to use the funds to cover $850 million worth of its assets frozen during investigations into third-party payment processor Crypto Capital.
New York’s Attorney General sued Bitfinex and Tether last month, alleging the two companies had mixed funds to conceal the extent of damage caused by the fiasco.
The white paper for Bitfinex’ LEO token states the exchange will use (at least) 27 percent of its monthly profit to buy LEOs back (at market price) until none are circulating publicly.
“iFinex and its subsidiaries will [also] use an amount equal to 95 percent of the recovered net funds from Crypto Capital […] to redeem and burn a corresponding amount of outstanding LEO tokens,” reads the white paper, before promising that “net recoveries” would be calculated in “good faith.”
Before Bitfinex’ offering, IEOs in 2019 had raised just $38.9 million, according to data released by BitMEX Research. So far, it’s private, institutional players and project teams seem most-likely to gain from their investments.
As for how the market reacted to the news — well, Bitcoin has been surging for several weeks, apparently completely indifferent to the whole ordeal. Go figure.
Jessica spends 12 hours a day on the internet managing security for web assets and loves her macha tea