Bitfinex, the controversy-riddled cryptocurrency exchange last week revealed that it is planning an initial exchange offering [IEO] worth a whopping $1 billion. This token sale is spearheaded in order to make up for its undisclosed $850 million loss, and sources say it’s gaining a head of steam.

According to renowned Bitcoin bull, Fundstrat head of research Thomas Lee, the LEO tokens are “oversubscribed,” pointing to heightened popularity in the exchange’s offering. Lee added that this is a sign of increasing trust in the exchange, despite the fiasco of the previous weeks.

Lee’s May 6 tweet read:

“Hearing @bitfinex LEO is oversubscribed… again affirms our sense that the Bitfinex has earned the trust of its customers/clients… and generally speaks well of them”

The whitepaper for Bitfinex’s LEO tokens surfaced on Twitter via Zhao Dong, a shareholder of the exchange. According to the contents of the whitepaper, nearly the entire $850 million undisclosed loss, which the exchange claimed is locked up by US, Portugal and Poland’s regulatory authorities, will be used to burn the LEO tokens when retrieved.

However, if the account is not “unfrozen,” then the exchange will take four-to-five years to buy back the tokens, on the basis of the past two years’ profit projections.

Given this scapegoat tactic used by the exchange and the magnanimity of their $1 billion valuation, Lee had previously stated that this token supply could have a “short-term negative impact on $BTC.” He added that the supply shock to the market, in light of this temporary token, served to regain lost money would require the crypto market to “absorb” the supply.

Furthermore, if these transactions are all fiat-to-crypto i.e. if LEO tokens are purchased by fiat currencies, then this would mean new investors would enter into crypto, however, he contends this possibility “makes less sense.”

Regardless, the “oversubscribing,” of Bitfinex’s IEO tokens is a significant positive sign that despite the exchange using their parent company’s Tether [USDT] holding to cover up the $850 million loss, investors still hold it in good stead.

It should be noted that this comment by Lee came after the response from the exchange to the New York Attorney General’s May 5 allegations. iFinex, the exchange’s parent company claimed that the NYAG order was based on ‘inaccurate or incorrect facts and wrong legal standard.’

iFinex further stated that the NYAG order was ‘highly disruptive’ as it resulted in Tether’s reserves of $2 billion being frozen. The document added that the “massive regulatory overreach has no corresponding benefit” as there was no fraud and “much less harm that is either ongoing or irreparable”

The post Bitfinex’s LEO tokens oversubscribed, claims Fundstrat’s Lee; positive sign for the exchange? appeared first on AMBCrypto.

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