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Bitfinex to Issue an Exchange Token, Shareholder Says

Maya Mandzikasvili | May. 1, 2019
Bitfinex to Issue an Exchange Token, Shareholder Says

May 01, 2019 | AtoZ Markets - According to a shareholder of the Hong Kong-based cryptocurrency exchange platform, Bitfinex may soon issue a proprietary exchange token.

Chinese trader announces Bitfinex plans in social media

Dong Zhao, a well-known over-the-counter trader in China who holds a stake in Bitfinex, first announced the news on Weibo, a Chinese microblogging website.

Zhao also revealed to one of the media outlets, that the exchange is planning the issuance, although the “details are not 100 percent confirmed.

Indeed, at this stage, it is unclear how the plan will be implemented or what exactly the participants will be offered proposals on the exchange of tokens.

Bitfinex needs to restore its reputation

If confirmed, this news deserves attention. Bitfinex needed more than ever the opportunity to restore its reputation. The recent allegations of the crypto exchange by the New York Attorney General’s office (NYSAG) caused significant Bitcoin flash crash and had a negative impact on the Bitfinex.

According to the NYSAG official statement, Bitfinex lost $850 million and used customer and corporate funds from the affiliated stablecoin operator Tether to cover theirs loses.

As per Attorney General, Bitfinex secretly arranged a $ 900 million loan from a subsidiary of the Tether exchange, which issues a stable (tethered) currency (USDT), to cover the deficit.

Bitfinex responses to the allegations

Bitfinex later responded to NYSAG announcement:

"The New York Attorney General’s court filings were written in bad faith and are riddled with false assertions, including as to a purported $850 million “loss” at Crypto Capital. We are and have been actively working to exercise our rights and remedies and get those funds released. Sadly, the New York Attorney General’s office seems to be intent on undermining those efforts to the detriment of our customers."

The Hong-Kong based crypto exchange noted, $ 850 million had been “seized” by various authorities and that it was working to retrieve the funds.

Dong Zhao-the mind behind Bitfinex token idea

The Chinese trader Dong Zhao, who is also the founder of the investment company DGroup, assured one of the media outlets, that he is the one who proposed the Bitfinex token plan. Just a few days after the statements of New York attorneys he said in his Weibo account that the exchange should take the opportunity to issue tokens worth $ 850 million to bring in tether equal to the frozen amount. Zhao stated in his post that Bitfinex token sale participants will receive an exchange token in return. According to the trader, the advantage of Bitfinex token issue for users is that “exchange tokens have better liquidity.

Crypto community stays skeptical about Bitfinex token

According to the Chinese trader, the method of issuing may be similar to the method of other exchange tokens that are distributed through pre-paid trading fee packages. Dong Zhao assured that he would do his best to make the deal happen.  

Zhao's proposal was ambiguously accepted by Weibo users. Many were skeptical about whether Bitfinex could truly return frozen funds.

One user noted that "if Bitphinex is confident that funds can be returned, no other plans are required. But if they issue tokens for exchanging debts for shares, it can mean that these funds have really disappeared and can reduce trust in the platform,” the user added.

Last Friday, Zhao said that the Chief Financial Officer of Bitfinex told him that the frozen $ 850 million would be returned "within a few weeks." Dovey Wan, the founding partner of the of blockchain fund Primitive, also raised several controversies regarding public information about Bitifnex and Tether:

Bitfinex has not provided any comments to an Atoz Markets request.  

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Disclaimer: The views and opinions expressed in this article are solely those of the author and do not reflect the official policy or position of AtoZ, nor should they be attributed to AtoZMarkets.