• Bitfinex shareholder appears to confirm the rumors
• Some $300 million have already been pledged
• A successful IEO could help cover the $850 million missing Tether funds

The embattled Bitfinex cryptocurrency exchange that recently made headlines because of the $850 million Tether Scandal is allegedly planning to issue a native exchange token to raise funds. A social media post by one of the exchange’s leading shareholders reveals.  

$300 Million pledged so far

The rumor came courtesy of a tweet by Dovey Wan, the same crypto entrepreneur who broke the news about the hacking of Bithumb Exchange last month. According to Wan, she got the news from “Bitfinex Equity shareholders while a shareholder Zhao Dong appeared to confirm the rumor. Wan’s tweet stated:

“Bitfinex is planning on an exchange token sale + IEO… plan to raise $1B in $USDT.”

A statement by billionaire investor in Bitfinex and widely recognized crypto trader Dong Zhao on social media site Weibo, reveals that the cryptocurrency exchange has laid down plans to create an Initial Exchange Offering (IEO) following the recent Tether scandal. There is information that there are local Asian investors who are already interested in the proposed token offering made by Zhao, with a Chinese-based miner suggesting there are pledges from investors amounting to at least $300 million in Tether.

Should the rumor be confirmed as true, this will present a bizarre situation because it was only last Friday that the New York Attorney general sued Bitfinex for fraud. As BR reported, the suit alleges that the cryptocurrency exchange took a dodgy loan from a sister company, the company that issued the Tether Stablecoin in order to cover-up for a $850 million hole in their finances following the unregulated payment processor it relied on, Crypto Capital Corps did not reimburse the locked up funds. Bitfinex has vehemently denied the charges and claimed the said funds were “seized and safeguarded” by Polish, Portuguese, UK and US authorities.    

Tether still popular in Asia

The Initial Exchange Offerings (IEO) has lately become the fundraising model of choice which has slowly edged out the scandal-ridden Initial Coin Offerings (ICO). In the IEO model, a centralized cryptocurrency exchange acts as the underwriter and operates the sale after thoroughly vetting the project and potential investors. They could use the IEO, which is currently monopolized by Binance and Huobi cryptocurrency exchanges, to address the alleged consequence for the New York suit, which is the alleged hole in Tether’s reserves. However, crypto enthusiast and whistleblower Wan thinks it will be a flawed strategy. She states:

“I just don’t see how this can be sustainable, it won’t make Tether fully backed again unless they distribute profit/new fund raised back to Tether reserve. [Bitfinex] has already securitized + tokenized its future cash flow for their last hack; this is another layer of leverage on top.”

Only time will tell how the IEO strategy will fare, seeing that Tether is still a popular cryptocurrency in the Asian markets, which seem to be spearheading the IEO at the expense of US-based investors who are legally barred from taking part.