Bitfinex Is Planning to Issue an Exchange Token, Shareholder Says

Hong Kong-based cryptocurrency exchange Bitfinex may soon issue a proprietary exchange token, according to a shareholder of the platform claiming knowledge of the plan.

Dong Zhao, a well-known over-the-counter trader in China who holds a stake in Bitfinex, who first announced the news on Weibo, told CoinDesk that the exchange is indeed planning the issuance, although the "Details are not 100 percent confirmed."

It's unclear at this stage how the plan would play out or what exactly participants in an exchange token offering would be promised.

If confirmed, the claim is notable as it comes soon after allegations from the New York Attorney General's office that Bitfinex lost $850 million in customer and corporate funds.

Subsequently, the attorney general said, Bitfinex then secretly arranged a $900 million loan from the exchange's affiliated company Tether, which issues the tether stablecoin, to cover the shortfall.

Zhao, who is also the founder of blockchain investment firm DGroup, said it was he who suggested the token plan to Bitfinex.

On April 28, days after the New York AG's allegations, he said on his Weibo account that the exchange should take the opportunity to issue tokens worth $850 million to bring in tether equal to the frozen amount.

Participants would get the exchange token in return.

"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," one user commented.

In one tweet that also noted Bitfinex's exchange token plans, she said, "If the $850 million can be easily crawled back, then why initial exchange offering?" and "If Bitfinex is highly cash flow positive, why borrowed from Tether?".