One of the best digital exchanges, Bitfinex, has announced that it will retrieve all of its LEO tokens and commence the process of burning them. The company’s announcement was published this Friday, and the firm called the move a part of its transparency initiative.
The exchange token redemption process has since become known as UNUS SED LEO Transparency Initiative, which will purchase back all circulating LEO tokens at its market rates. After the purchase, the firm plans to destroy all of the tokens, as it pays back all those who purchased it in the token sale that took place last month. The token sale was quite successful, seeing $1 billion raised.
The exchange only launched a token sale so that it could cover a major $850 million shortfall flagged back in April by the New York Attorney General. According to the Attorney General’s office, the exchange lost millions, and it kept this loss a secret from the public. Not only that, but it attempted to cover the loss with a major loan from Tether Ltd, its sister company, which is responsible for issuing the stablecoin Tether (USDT).
Token redemption is underway
Bitfinex started the redemption yesterday, June 14th, at 10:00 UTC. It also stated that they would burn tokens every three hours until the entire supply is taken out of circulation. In addition, the exchange will also provide insight into the collected fees, as well as the burned amount in real time. For that purpose, they created a dedicated dashboard which users can check out at any time, and follow the company’s progress.
All of this was done so that the process could be transparent and verifiable, out of respect for their users. The company believes that a constant, continuous redemption is the fairest approach to buy back its tokens. Further, they aim to remove any uncertainty that LEO holders might have.
The initial phase of the process is said to only include revenue received from trading fees. But, in the following weeks, the exchange aims to include all revenue streams. As for the $850 million that the company allegedly lost, according to the AG’s office, Bitfinex responded by claiming that the funds are not lost. Instead, they are locked up on Crypto Capital, another payment platform.
Now, they claim to have recovered all the funds, and that this is the money that will be used for buying and burning LEO. This way, everybody wins, as those who kept LEO can get their funds back, likely at an increased price. Meanwhile, Bitfinex would improve its reputation and clear out any uncertainty among those who engage in crypto trading on the platform.
Of course, the matter of centralized exchanges still exists among those who seek to buy cryptocurrencies on regulated platforms. As long as users have to store their coins and tokens into a wallet controlled by another entity — they should not consider these coins their own. Many point out that the situation with Bitfinex could have ended a lot differently, and that the current situation is pretty much the best anyone could hope for.
This is why a lot of support goes out to DEXes, where issues such as this are unlikely to happen.