Controversy-ridden cryptocurrency exchange, Bitfinex may consider issuing a proprietary exchange token soon, according to a stakeholder who claims to know about the plan.
Initially announced on Weibo, Dong Zhao, a stakeholder in Bitfinex and a famous OTC trader in China, revealed that the exchange is weighing up the possibility of issuing an exchange token. Precisely, he suggests that Bitfinex is eyeing a $1 billion token sale.
Why It Matters
The move reported by Zhao is significant given that it has come just a few days after the New York Attorney General’s office alleged that Bitfinex lost $850 million in corporate and customer funds.
The AG’s office further claimed that the exchange secretly prepared a $900 million loan from its affiliated firm Tether Ltd, to make up for the shortfall.
However, Bitfinex denied those allegations and said it was making efforts to retrieve the $850 million funds which were purportedly “seized” by authorities.
Is Bitfinex Planning a Back Door Exit?
According to Zhao’s latest revelation, Bitfinex could take-up the opportunity to offer tokens worth $850 million or even more to raise funds to the amount that the authorities claim it lost.
Noting that he is the one behind the idea, Zhao explained that “the issuance method could be similar to that of other exchange tokens, which were distributed through pre-paid trading fee packages.”
He, however, noted that further details about the issuance are “not 100 percent confirmed.”
Although the token issuance seems like the nearest exit according to the Zhao’s suggestions, the idea raised questions on whether the exchange will ever be able to regain the seized funds as it claimed in its response to the Attorney General.
One of the standout comments queried,
“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 with swapping debts to shares, that could mean those funds are gone and could lower the platform’s credibility.”
Also in a tweet, Dovey Wan, Founding Partner of Blockchain Fund Primitive asked, “if the $850 million can be easily crawled back, then why [would it do] initial exchange offering?” and “if Bitfinex is highly cash flow positive, why borrowed from Tether?”
At press time, though, the exchange is yet to accept or deny the rumors. It has also not revealed any details about the token issuance will play out or what the participants should look forward to when they acquire these tokens.