Apparently, in the case of cryptocurrency exchange Bitfinex, you make plans to raise up to $1 billion from investors to shore up the company’s financials through what’s become known as an initial exchange offering.
Twitter is rife with speculation from the likes of noted crypto bull Thomas Lee of Fundstrat Global Advisors that Bitfinex’s sale is already oversubscribed. Hong Kong-based IFinex, the parent company that controls Bitfinex and the stablecoin Tether, hasn’t responded to requests for comment or to confirm the planned token sale. Lee noted that he isn’t sure the offering exists either.
Bitfinex and Tether have denied the coverup allegations and are seeking to vacate or modify an injunction filed against them by the New York attorney general last month in an effort to prevent disruptions to their business. The companies termed the alleged commingling of funds as a loan after saying they were unable to access funds seized by regulators from payment facilitator Crypto Capital.
By raising $1 billion in Tethers, the exchange could replenish its cash reserves and once again fully cover this so-called stablecoin. Traders rely on Tether as a substitute to fiat currency, based on Tether’s historical claims that each token is backed by $1 in assets. Last week, Tether said that it’s no longer the case, and that its reserves equal 74% of outstanding coins.
“If Bitfinex successfully raises this capital, and all signs thus far point to them succeeding, investors in these new LEO tokens will likely be rewarded,” Jeff Dorman, chief investment officer at Los Angeles-based Arca Funds, said in an email. “With the capital hole filled, Bitfinex and Tether will likely continue to operate with a well deserved reputational black eye.”
Bitfinex Chief Technology Officer Paolo Ardoino tweeted the word “LEO”—supposedly, the name of the new token—on May 5, and the exchange’s confirmed official account retweeted it.
The token name supposedly comes from Aesop’s fable “The Sow and the Lioness,” in which a lioness is asked if she has only one child. “The lioness then replies, ’One, but a lion,’” according to an unconfirmed circulated paper.
Bitfinex spokesman Kasper Rasmussen hasn’t returned repeated requests for comment.
“We understand that there are a lot of people who want this to fail, in order to help remove an unregulated exchange and a loosely regulated stabletoken,” Doman said. “But it’s simply a reality that people move on from scandals, and companies who remain solvent get to continue operating.”