Enroute to its redemption, cryptocurrency exchange Bitfinex announces a new transparency initiative that will have the exchange buyback and burn its LEO exchange token, as per an announcement by the firm on Friday.
As per the firm, the UNUS SED LEO Transparency Initiative is a part of its token redemption process, the public is entitled to observe the whole process. Wherein the parent firm iFinex use its gross revenues to purchase circulating LEO tokens at market rates. These token will be destroyed or burned.
Notably, the firm will effectively pay back those who bought the exchange token in a $1 billion sale early last month. In April, the New York attorney general alleged the firm for cheating its investors by covering up a massive $850 Million Loss with a loan from sister firm Tether Ltd, the issuer of the tether stablecoin. It appears the sale was launched to cover an $850 million shortfall.
The redemption mechanism went live at 10.00 UTC Friday. As per the firm, tokens will be burned “every 3 hours until 100% of supply has been taken out of circulation.” Further, the exchange states that the public will be provided with “real-time insights into all collected platform fees, and subsequent LEO burns” via a dedicated dashboard, as the LEO buyback progresses.
The firm further explained:
“We have decided upon a continuous burning mechanism – verifiable and in real-time – to keep the process as fair as possible for our users. As our revenues flow in continuously, we felt that the fairest approach to token buybacks would be one built around continuous and constant redemptions. We are doing this to remove the possibility of uncertainty from LEO holders, subsequently allowing our community to track iFinex revenues, as well as LEO token burn quantities, in an open manner.”
The exchange also states that the first phase of the burn mechanism will only include revenue from trading fees, though in coming weeks they plan to include “all revenue streams.”
As for the New York attorney general’s claim Bitfinex states that the funds had in fact been locked up on a payments platform called Crypto Capital. As per the recent announcement, the firm adds that any funds recovered from Crypto Capital would be used to buy and burn LEO tokens, as would an amount worth “at least 80% of recovered net funds” from its 2016 hack of cryptos worth $80 million at the time.
Image source – Bitfinex Medium