Bitfinex has revealed plans of selling its asset LEO, which is estimated to be worth $1 billion. Although this might be seen as a bland move, leading analysts have nonetheless warned that it might hurt Bitcoin.
$1 Billion Worth of LEO Tokens
In a report last week by NewsBTC, Dovey Wan, the founder of Primitive Ventures, indicated that Bitfinex had plans of raising over $1 billion through the offering of its branded crypto assets through an on-platform initial coin offering. A section of the crypto community took the news as a joke, stating that it was not possible for the Hong Kong-based crypto exchange to come up with such a strategy after last week’s news indicating that the exchange was in a risky financial and legal standing.
Chinese cryptocurrency investor Zhao Dong published a document that showed that the LEO plan will, however, actually be moving forward. The Block’s Larry Cermak has stated that already, $600 million of the funding has been allocated to private investors who are considered to be industry insiders including Asian venture capital firms and Bitcoin Whales.
Bitfinex to Use 27% of Profits
The published document shows similarities between LEO and Binance Coin (BNB). Bitfinex plans to use 27% of its profits each month to acquire LEO tokens taken as dividends for holders. Additionally, if the exchange manages to receive $850 million, Bitfinex will be able to buy back LEO using most of the capital. The $850 million would account for the money it is owed from payment processor Crypto Capital and from a hack that lost the exchange thousands of Bitcoin.
Fundstrat’s Tom Lee has suggested that the exchange’s move will be a catalyst for negative price action for BTC. He indicated that $1 billion worth of tokens will affect BTC and other crypto assets because the market will need to absorb an increase in LEO tokens.
Crypto News Desk
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