Exploring Bitfinex's emergency plan: a $1 billion initial exchange offering

Zhao Dong, one of China's biggest OTC traders, recently published a marketing document detailing iFinex Inc. plans to conduct an initial exchange offering, aiming to raise $1 billion.

A document allegedly released by iFinex Inc.-a privately held financial technology company based in the British Virgin Islands that operates Bitfinex and owns Tether Ltd.-revealed the firm's intention to create a subsidiary under the name of Unus Sed Leo Ltd. to make available up to $1 billion of tokens for purchase.

A 25 percent withdrawal and deposit fee will also be given to the token holders, but those who hold more than $50 million USDT worth of LEO will be able to withdraw $2 million USD for free and anything above that amount will be charged a 1 percent fee.

The one billion LEO tokens issued by Unus Sed Leo Ltd. will be priced at 1 USDT per coin and will be sold in private offerings without general solicitation or advertising.

If Bitfinex is able to recover the funds currently held by Crypto Capital Corp., it will allocate 95 percent of that money to repurchase the outstanding LEO tokens within 18 months from the date of recovery.

If the exchange can get back a portion of the 119,756 bitcoins that were hacked in 2016, at least 80 percent of it would be used to buy back and burn the tokens.

Interestingly enough Zhao Dong, a Bitfinex shareholder who released the document, implied that around 60 percent of tokens have already been sold by stating that a sum of $600 million has been raised by the firm in private through verbal commitments.

Although the launch of an initial exchange offering may help alleviate Bitfinex financial responsibilities, its reputation has been damaged by all the negative news surrounding the platform.

The Bitfinex exodus could have created the recent spike in prices where most cryptos are trading at a premium compared to other exchanges, resulting in CoinMarketCap removing the exchange from its price calculations.

If Zhao Dong is right and approximately 600 million of the 1 billion issued LEO tokens have already been sold to private investors, then there might still exist some credibility around Bitfinex.