Is the Successful BitFinex IEO pumping Bitcoin (BTC) prices?

Is the Successful BitFinex IEO pumping Bitcoin (BTC) prices?

 
SHARE:

Early May 2019, BitFinex tweeted that “they were in the process of conducting their first IEO. A newly formed subsidiary of iFinex, Unus Sed Leo Ltd. (USL), would be selling up to 1 billion USDT of newly created LEO tokens in a private sale.” The need for a BitFinex IEO was to investors BitFinex’s admittance that it needed more investor funds to cover the $850 million loss of investor funds it had caused.

The office of the New York Attorney General had already accused BitFinex of covering up that loss of funds using Tether’s reserves.  Letitia James, the AG had stated that:

“Our investigation has determined that the operators of the ‘BitFinex’ trading platform, who also control the ‘tether’ virtual currency, have engaged in a cover-up to hide the apparent loss of $850 million of the commingled client and corporate funds. … We will continue to stand-up for investors and seek justice on their behalf when misled or cheated by any of these companies.”

How the BitFinex IEO and Scandal Affected Bitcoin (BTC) Prices

This event sent the crypto market prices on a downward spiral, with investors in a panic over the lack of integrity in the crypto’s market structure. The crypto market is highly dependent on Tether, a stable coin that is backed by the US dollar one for one. This arrangement gives the stable coin the stability of fiat and crypto’s legendary operational ability.

The flight of capital that the New York Attorney General (NYAG) announcement resulted in Bitcoin’s seventh largest confirmed day transactions as per availed blockchain data. The data shows that 404,116 confirmed transactions were made on April 25th, 2019, while all other higher recorded sales all happened between December 2017 and January 2018.

Investors needing security for their capital sold out Tether in exchange for Bitcoin or other altcoins. There was the underlying fear that Tether was not backed by the USD since BitFinex had taken up its funds. The “FUD” the Tether-BitFinex scandal caused pushed the rallying Bitcoin prices backward to $5,000 from a high of $5,650.

The Successful BitFinex IEO Keeps On the BTC Bull on Track

NYAG met with the Tether and BitFinex counsel and uncovered that a $900 million line of credit had been opened between the two on March 19th, with $750 released to BitFinex.   Tether claimed that it had revealed this information to its investors on the website though no disclosure had been made till the NYAG suit was filed.

BitFinex, however, revealed in a statement that the funds were not lost but “seized and safeguarded.” To keep afloat and keep the crypto market from sinking into a panic, the firm floated a BitFinex IEO to fill the gap left by the missing funds.

Despite the skepticism in the crypto sphere, the BitFinex IEO was a hundred percent successful and according to commentators, it is this that is partly pumping Bitcoin (BTC) prices.

Paolo Ardoino, BitFinex’s CTO went on to tweet that “BitFinex can raise 1b USDT in 10 days, in a private sale. Private companies, giants in our industry and outside, made investments for > 100m each. A legion of inside and outside users made investments for > 1m each.”

To reiterate that investors still had confidence in BitFinex and Tether, Ardoino went on to say that the BitFinex IEO was a success. “Why? Because they know we are trustworthy, they recognize what we have been doing (without needing us bragging about it publicly), and they want us to keep fighting for the industry whole. Their own words. Thank you, everyone, for the amazing support we got. We are impressed,” he added.