Cryptocurrency exchange Bitfinex is rumored to be launching an initial exchange offering (IEO) according to a Weibo post from Bitfinex shareholder and founder of blockchain investment firm DGroup, Dong Zhao, April 29, 2019.
The news arrives at a time where Bitfinex is tangled in controversy worth $850 million with the ever-contentious stablecoin, Tether (USDT).
The Rumor Mill
Zhao, a notable over-the-counter (OTC) Bitcoin trader has found himself in the center of a cryptoverse-frenzy as crypto entrepreneur Dovey Wan, founding partner of Primitive Ventures, similarly broke the news.
Whilst unconfirmed, Zhao spoke with CoinDesk, revealing that the “details are not 100 percent confirmed”.
Those who are eagerly awaiting an official response from Bitfinex have begun to speculate how the recent loss of Bitfinex customer funds and this are connected.
In the final weeks of April, the New York State Department of Financial Services alleged that iFinex, the holding company of Bitfinex and Tether had conspired to cover up the losses of around $850 million which the exchange claimed to have been lost after sending the funds to Crypto Capital Corp to process.
Soon after, somewhere around 700,000 ether, and over 17,000 bitcoin had been moved from Bitfinex’s cold wallet. Furthermore, Bitfinex is claimed to have given itself access to $900 million of Tether’s reserves; to add more speculative fuel to the mix, Zhao reportedly is the one who suggested the IEO plan to Bitfinex via his Weibo account, April 28, 2019.
Twitter user “Zirui” took it upon herself to chime in and confirm the Bitfinex IEO rumor, referencing a post from Zhao and further claiming that “some big whales” had already “reserved $300 million of the allocations” in USDT, essentially securing their positions for the IEO.
Commenting further on the rather baffling state of affairs, Dovey Wan Tweeted:
Speaking with CoinDesk, Zhao noted that cryptocurrency exchange tokens “have better liquidity” which positions them as “the only real token that is not a shitcoin.” He adds:
“The issuance method could be similar to that of other exchange tokens, which were distributed through pre-paid trading fee packages.”