Cryptoasset exchange Bitfinex has confirmed that it is planning to raise $1 billion through an initial exchange offering (IEO).
Bitfinex, which operates under its parent company iFinex, Inc., a British Virgin Islands incorporated and Hong Kong-operated financial technology firm, has released a whitepaper, titled “Initial Exchange Offering of LEO Tokens For Use on iFinex Trading Platforms.”
$1 Billion LEO Token Sale, Not For US-based Investors
The whitepaper, which was published on May 8th, 2019, clarifies that the LEO tokens will not be sold to US-based investors. Transactions involving the exchange’s new token may also be prohibited in other jurisdictions, IFinex's paper states.
According to iFinex’s latest whitepaper, the firm made net profits of around $730 million for FY 2017/2018, however the New York Attorney General recently alleged that the company may have lost $850 million - after it began working with Crypto Capital, a cryptocurrency payment processing service provider.
Private Token Sale Will End On May 11th, 2019
Although the whitepaper regarding Bitfinex’s IEO has now been officially released, there had been unconfirmed reports earlier that the exchange operator’s management was planning to raise funds through a token sale.
As confirmed in the whitepaper, Bitfinex’s management intends to sell up to 1 billion LEO tokens, with each worth 1 USDT. The private token sale will reportedly end on May 11th, 2019.
If required, a public token sale may be launched afterwards in order to meet the fundraising target.
Those who purchase LEO tokens may use them for transactions conducted on Bitfinex or for various other purposes, the whitepaper noted. Meanwhile, Bitfinex’s management might try to use the funds raised to recover from the potential losses incurred due to the alleged mismanagement of funds by Crypto Capital.
Public Token Sale Will Be Conducted If “Fewer Than 1 Billion USDT Tokens Sold”
However, it is still unclear whether the funds ($850 million) have actually been seized by American, Portuguese, and Polish authorities - as Crypto Capital had claimed earlier.
As noted in the whitepaper, if less than 1 billion LEO tokens are sold iFinex may sell the remaining tokens after this token sale has concluded. At present, IFinex, Inc. is still contesting the charges it faces, from the New York Attorney General, in a US court.
Bitfinex Investors Not Concerned About Fraud Allegations
Last month, Bitfinex shareholder Zhao Dong had been trying to reassure crypto industry participants that the exchange is solvent. According to the prominent shareholder, Giancarlo Devasini, the Chief Financial Officer at Bitfinex, had told investors that the situation they were facing was temporary and that the funds would be recovered soon.
Notably, Dong has also been accepting pre-orders for Bitfinex’s upcoming token sale through his crypto-lending application Renrenbit. The well-known investor had reportedly taken pre-orders from users who wanted to participate in the public phase of Bitfinex’s upcoming $1 billion token sale, even before IFinex published an official whitepaper for it.