After the accusation of the New York Attorney General, Bitfinex managed to stabilize the situation and continue its business with such success that the exchange is among the top 10, according to CoinMarketCap. Read on about what helped the platform not to lose customers’ trust.
2019 has become a challenging year for iFinex (the company that owns Bitfinex and issues Tether). The company was accused of hiding $850 million. The charge was brought by the New York Attorney General. We are talking about the fact that the money was transferred to the Panamanian office of Crypto Capital Corp, which deals with digital transfers. The bulk of the funds was withdrawn from the exchange’s client funds. The prosecutor’s office suggested that the deficit was covered by the reserve fund of an affiliate company Tether Limited. The company itself denied the accusation. The company’s employees stated that the money was temporarily frozen but not withdrawn from the accounts. But the community reacted violently to that news. According to insider data, about 450,000 ETH and 18,000 BTC were withdrawn from Bitfinex in just a few days, which was why the exchange rate of these coins collapsed.
To stabilize the situation, the exchange decided to issue a native token, which should cover the budget deficit. In May 2019, the company Unus Sed Leo Limited, engaged in creating and promoting the token, joined iFinex.
The IEO of the new token was conducted in a closed format. Coins in the amount of 1 billion were released for sale. Tokens were sold for $1. The White Paper of the project states that iFinex will spend up to 27% of its income every month on the LEO buyback-and-burn to cover the hole in the budget. This process will last until all tokens are withdrawn from commercial circulation. If this scheme does not work, the developers have a backup plan: the debt will be covered by the company’s main income for four years.
To prove the transparency of their intentions, information about the redeemed and burned tokens is posted in a special section of the official website.
About UNUS SED LEO
UNUS SED LEO (LEO) is a utility token in the services that iFinex develops, namely Bitfinex, Dazaar, Betfinex, EOSfinex, and others. Coin holders are provided with discounts on services, as well as special conditions for margin trading and working with derivatives (futures, options, etc.).
The token got its name from the iFinex company’s motto, “Unus Sed Leo”. The name comes from a Latin phrase in one of Aesop’s fables, in which a pig condemns a lion for having only one child. Leo agrees but notes that in her case, the child is a lion, not a pig (quality is more important than quantity).
Metaphors and bravado aside, LEO does have some significant advantages over other exchanges’ tokens in terms of “tokenomics”, or the principles by which tokens will be processed and manipulated.
As already noted, 27% of iFinex’s monthly revenue is used to redeem and burn an equal number of LEO tokens at the current market price until no LEO tokens are left in commercial circulation.
This scheme is typical for utility tokens. For example, Binance uses the BNB burning mechanism until only half of the tokens (100 million) remain in circulation. For comparison, the LEO token burning scheme looks much more aggressive than that of BNB, that’s why the LEO cryptocurrency is growing rapidly.
The coin has three main use cases:
replenishment of the Bitfinex budget;
expanding opportunities for customers;
development of the iFinex ecosystem.
As in the case of the BNB on the Binance exchange, LEO acts as a native exchange’s coin, the use of which gives several advantages:
Saving on fees. All fees for those who hold the token will be reduced by 15% for all pairs of cryptocurrencies (including trading with stablecoins). Moreover, takers who hold more than $5,000 in LEO (calculated for the previous month) receive an additional 10%.
Monthly discounts. Holders receive a discount of 0.05% for every 10,000 USDT in LEO tokens held on the trader’s balance during the previous month (calculated taking into account each day of the month). The maximum discount is 5%.
Discounts on withdrawals and deposits both in cryptocurrencies and in fiat. Holders receive a 25% discount on crypto withdrawals and deposits. In addition, holders of more than $50 million UNUS SED LEO do not pay a fee for withdrawing cryptocurrencies and deposits. Also, the additional fee will be reduced to 2% (from 3%) for any withdrawal of funds above $2 million in fiat.
Despite the scandalous reputation of Bitfinex, the exchange remains on the list of leaders and is popular among traders. To date, LEO is mainly considered a utility token with interesting tokenomics, which provides good discounts on the iFinex platforms and services. Therefore, if you trade in large volumes, LEO will save significant money.
Due to a number of tragedies that have happened in the crypto space over the past year, many investors are afraid to invest large sums in LEO due to the tarnished reputation of the exchange. However, it should not be dismissed out of hand. During its existence, the token has not experienced a single sharp collapse of the exchange rate. Investing in LEO is a risky but profitable strategy, but subject to constant exchange rate monitoring. It is crucial to notice the trend reversal and sell the coins before the collapse.