[ad_1]
<div _ngcontent-c14 = "" innerhtml = "
The missing $ 851 million of Bitfinex has been recovered. It has been seized by various governments, including the United States Department of Justice. Crypto Capital Corporation, an unlicensed fund processing company, with which Bitfinex has placed the money, is accused of money laundering on a global scale, and two people have already been identified. accused of fraud.
But that does not solve the immediate problem of Bitfinex. His budget is still less than $ 851 million and this money will not be paid soon, if at all. & Nbsp; Bitfinex's parent company, iFinex, has therefore come up with a brilliant plan to fill the gap in its balance sheet. Why not sell new chips? Rather a lot of chips, actually – a billion cool.
A visual representation of the Bitcoin cryptocurrency is displayed in front of the Bitcoin price chart on the Bitfinex Cryptocurrency Exchange website. & Nbsp;
Getty
This is not the first time that Bitfinex has plugged a hole in its balance sheet by issuing tokens. In 2016, he raised approximately $ 72 million in partially replacing customer deposits with BFX tokens after the funds were stolen in a hacking. This had to be a temporary fix: when the money would be recovered, the chips would be redeemed and burned. The money has never been recovered, but Bitfinex has traded BFX chips for profits. The last ones were burned in April 2017.
This last scheme is also "temporary". If temporary, in fact, some might wonder why Bitfinex has to do it because it does not seem to lack benefits: according to The blockit earned $ 404 million last year and paid $ 261 million in dividends. But as we will see, iFinex, the owner of Bitfinex, has a very good reason to embark on this path. The US authorities are on his case. He has to make some changes – and quickly.
For the moment, there is no official prospectus for the new issue of tokens. There is only one three-page marketing document Zhao Dong, shareholder of Bitfinex, insists that it is a "white paper". Despite this, the company says it has already raised $ 600 million in private pledges.
So, how will this token work? Well, let's imagine a bank holding company whose main trading subsidiary has just lost $ 851 million in a risky contract with a shadow bank. Another subsidiary – a cash investment fund – lent him money from his own reserves to cover the losses. But this left a hole in the balance sheet of the investment fund. Customers who thought their investment was fully secured by cash reserves so they could withdraw their money at any time are angry. And now the Attorney General of New York has issued a & nbsp;injunction& nbsp; prevent the investment fund from lending more money to the troubled trader. What to do?
The trader and the investment fund both need new capital. And although banks create money by lending, they can not create money to recapitalize. They must persuade someone to give them or lend them money. For the bank holding company, the obvious solution would be a rights issue, although it may also issue a form of debt that can be converted into shares: preferred shares, for example, or "conditional convertible" bonds ( CoCo).
But iFinex, which owns both Bitfinex and Tether, is not a bank holding company. He owns a group of transmitters and exchanges of crypto-currencies. And for a cryptographic company, rights issues and convertible debt are SO last century. What iFinex wants is to raise funds from investors without creating new bonds or diluting existing shareholders (this indicates that the "marketing document" for the token system was published by one of these shareholders). Hence the token scheme.
At first glance, the token system seems to consist of raising new funds to recapitalize Bitfinex and Tether. But a bit of digging reveals that this is not the plan. Banks – and cryptocurrency companies that behave like banks – can recapitalize by other means. Some of them would not be tolerated by regulators, and others are downright illegal. But hey, who regulates a cryptocurrency issuer?
The goal is to create a new affiliate of iFinex for the sole purpose of issuing new LEO tokens. The LEO must be purchased with USDT, which you will remember as it is the token issued by Tether. Tether belongs to iFinex. Thus, iFinex would not collect any new money. It would simply be trading old lamps against new ones – on one's own record. How could this recapitalize Bitfinex and Tether?
Let's look at Tether first. Calling 1 billion USDT is more than enough to restore 100% reserve support to the rest. In fact, Tether would have some cash, which may not be lent to the USDT issue, but could be lent to Bitfinex without violating NY AG's injunction.
But it does not seem like iFinex is planning to burn the USDT it calls. Rather, he seems to intend to leave it in LEO's balance sheet. Or maybe transfer them to Bitfinex, to pay off Tether's loan. After all, LEO will not be secure. Customers will have no rights to LEO's badets, unlike Tether's.
Tether's loan to Bitfinex is currently secured by shares of DigFinex, which is the ultimate owner of iFinex. But since iFinex has both Bitfinex and Tether, the "arm's length" loan is a forgery and self-collateral is potentially fraudulent. And the NY AG knows it. iFinex must get rid of this loan quickly.
I suspect that's what LEO really is. Recapitalization of Bitfinex and elimination of the claim on Digfinex shares. And write off Tether's loan to Bitfinex.
But why would bettors exchange USDT, which, although they are not entirely reserved, is at least supported by a fictitious claim on the $ 851 million "lost" by Bitfinex, against a totally unsecured token? Why would they want to draw on their holdings in USDT, which is a well established and widely traded cryptocurrency, to buy a brand new coin from the same issuer? What is it that encourages investors to participate in this exchange of badets?
Usually, if you exchange secure items for unsecured items, you must do so with a discount because they are riskier than guaranteed. To our knowledge, iFinex does not offer any discount on the symbolic price, but traders who purchase the coin will benefit from various discounts on trading services via iFinex exchanges, including Bitfinex. The question is whether these discounts will be sufficient to encourage merchants to unload from the USDT and to buy the new coin.
Due to discounts, iFinex describes LEO as a "utility piece". Usually, such a piece would be a form of marketing: buy our piece, get discounts on our exchange. But this coin has a built-in redemption and burning schedule. iFinex will buy a portion of the LEO a month with its profits and then destroy them. If the $ 851 million missing by Bitfinex is recovered, at least 95% of it would also be used to buy back and destroy LEO. And, what is even more unlikely, 80% of any product recovered from Bitfinex 2016 hacking would also be used for this purpose. It is strange to design a "utility" coin designed to self-destruct in this way.
The buyback and burn program suggests that, like the 2016 BFX tokens, this piece is only designed as a temporary solution to iFinex's capital shortage. It is therefore in no way a real "service room". The discounts are aimed at attracting traders who otherwise would have no incentive to buy the coin. But issuing with a large discount would have a similar effect. I'm wondering if iFinex has opted for a "utility" coin, because a coin issued solely to recapitalize Bitfinex and Tether could cause it to fail. Howey's test? The fact that the marketing document specifically prevents US investors from buying the new coin suggests that this may be the case.
In 2016, Bitfinex managed to issue tokens to cover its losses due to fraud. In 2019 he seems to be trying to do it again. But if iFinex was actually a bank holding company, would that be elusive? Perhaps it is time for issuers and exchanges of cryptocurrency to be subject to the same regulations as traditional banks and stock exchanges.
& nbsp;
">
The missing $ 851 million of Bitfinex has been recovered. It has been seized by various governments, including the United States Department of Justice. Crypto Capital Corporation, an unlicensed fund processing company, with which Bitfinex has placed money, is accused of money laundering globally, and two people have already been charged with fraud. .
But that does not solve the immediate problem of Bitfinex. There is $ 851 million left, and the money does not come back sooner – if at all. For example, BitFinex's parent company, iFinex, has come up with a brilliant plan to fill the gaping hole in its balance sheet. Why not sell new chips? Rather a lot of chips, actually – a billion cool.
A visual representation of the Bitcoin cryptocurrency is displayed in front of the Bitcoin price chart on the Bitfinex Cryptocurrency Exchange website.
Getty
This is not the first time that Bitfinex has plugged a hole in its balance sheet by issuing tokens. In 2016, she raised about $ 72 million by partially replacing client deposits with BFX tokens after the theft of funds during a hacking. This had to be a temporary fix: when the money would be recovered, the chips would be redeemed and burned. The money has never been recovered, but Bitfinex has traded BFX chips for profits. The last ones were burned in April 2017.
This last scheme is also "temporary". If temporary, in fact, that some might wonder why Bitfinex should do it, because it does not seem to lack benefits: according to The blockit earned $ 404 million last year and paid $ 261 million in dividends. But as we will see, iFinex, the owner of Bitfinex, has a very good reason to embark on this path. The US authorities are on his case. He has to make some changes – and quickly.
For the moment, there is no official prospectus for the new issue of tokens. Bitfinex shareholder Zhao Dong only published a three-page marketing document. He insists that this is a "white paper". Despite this, the company says it has already raised $ 600 million in private pledges.
So, how will this token work? Well, let's imagine a bank holding company whose main trading subsidiary has just lost $ 851 million in a risky contract with a shadow bank. Another subsidiary – a cash investment fund – lent him money from his own reserves to cover the losses. But this left a hole in the balance sheet of the investment fund. Customers who thought their investment was fully secured by cash reserves so they could withdraw their money at any time are angry. And now, the New York Attorney General has issued an injunction to prevent the investment fund from lending more money to the troubled trader. What to do?
The trader and the investment fund both need new capital. And although banks create money by lending, they can not create money to recapitalize. They must persuade someone to give them or lend them money. For the bank holding company, the obvious solution would be a rights issue, although it may also issue a form of debt that can be converted into shares: preferred shares, for example, or "conditional convertible" bonds ( CoCo).
But iFinex, which owns both Bitfinex and Tether, is not a bank holding company. He owns a group of transmitters and exchanges of crypto-currencies. And for a cryptographic company, rights issues and convertible debt are SO last century. What iFinex wants is to raise funds from investors without creating new bonds or diluting existing shareholders (this indicates that the "marketing document" for the token system was published by one of these shareholders). Hence the token scheme.
At first glance, the token system seems to consist of raising new funds to recapitalize Bitfinex and Tether. But a bit of digging reveals that this is not the plan. Banks – and cryptocurrency companies that behave like banks – can recapitalize by other means. Some of them would not be tolerated by regulators, and others are downright illegal. But hey, who regulates a cryptocurrency issuer?
The goal is to create a new affiliate of iFinex for the sole purpose of issuing new LEO tokens. The LEO must be purchased with USDT, which you will remember as it is the token issued by Tether. Tether belongs to iFinex. Thus, iFinex would not collect any new money. It would simply be trading old lamps against new ones – on one's own record. How could this recapitalize Bitfinex and Tether?
Let's look at Tether first. Calling 1 billion USDT is more than enough to restore 100% reserve support to the rest. In fact, Tether would have some cash, which may not be lent to the USDT issue, but could be lent to Bitfinex without violating NY AG's injunction.
But it does not seem like iFinex is planning to burn the USDT it calls. Rather, he seems to intend to leave it in LEO's balance sheet. Or maybe transfer them to Bitfinex, to pay off Tether's loan. After all, LEO will not be secure. Customers will have no rights to LEO's badets, unlike Tether's.
Tether's loan to Bitfinex is currently secured by shares of DigFinex, which is the ultimate owner of iFinex. But since iFinex has both Bitfinex and Tether, the "arm's length" loan is a forgery and self-collateral is potentially fraudulent. And the NY AG knows it. iFinex must get rid of this loan quickly.
I suspect that's what LEO really is. Recapitalization of Bitfinex and elimination of the claim on Digfinex shares. And write off Tether's loan to Bitfinex.
But why would bettors exchange USDT, which, although they are not entirely reserved, is at least supported by a fictitious claim on the $ 851 million "lost" by Bitfinex, against a totally unsecured token? Why would they want to draw on their holdings in USDT, which is a well established and widely traded cryptocurrency, to buy a brand new coin from the same issuer? What is it that encourages investors to participate in this exchange of badets?
Usually, if you exchange secure items for unsecured items, you must do so with a discount because they are riskier than guaranteed. To our knowledge, iFinex does not offer any discount on the symbolic price, but traders who purchase the coin will benefit from various discounts on trading services via iFinex exchanges, including Bitfinex. The question is whether these discounts will be sufficient to encourage merchants to unload from the USDT and to buy the new coin.
Due to discounts, iFinex describes LEO as a "utility piece". Usually, such a piece would be a form of marketing: buy our piece, get discounts on our exchange. But this coin has a built-in redemption and burning schedule. iFinex will buy a portion of the LEO a month with its profits and then destroy them. If the $ 851 million missing by Bitfinex is recovered, at least 95% of it would also be used to buy back and destroy LEO. And, what is even more unlikely, 80% of any product recovered from Bitfinex 2016 hacking would also be used for this purpose. It is strange to design a "utility" coin designed to self-destruct in this way.
The buyback and burn program suggests that, like the 2016 BFX tokens, this piece is only designed as a temporary solution to iFinex's capital shortage. It is therefore in no way a real "service room". The discounts are aimed at attracting traders who otherwise would have no incentive to buy the coin. But issuing with a large discount would have a similar effect. I wonder if iFinex has opted for a "utility" coin because a coin issued solely to recapitalize Bitfinex and Tether could fail America's Howey test. The fact that the marketing document specifically prevents US investors from buying the new coin suggests that this may be the case.
In 2016, Bitfinex managed to issue tokens to cover its losses due to fraud. In 2019 he seems to be trying to do it again. But if iFinex was actually a bank holding company, would that be elusive? Perhaps it is time for issuers and exchanges of cryptocurrency to be subject to the same regulations as traditional banks and stock exchanges.
