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Can't see any threads for this on the forum so let me share this one here

Bitfinex ‘Official Doc’ Confirms Plans to Raise up to $1 Billion in IEO for Its Token LEO

Zhao Dong, a shareholder of cryptocurrency exchange Bitfinex, has released new promotional material detailing the exchange’s upcoming initial exchange offering (IEO) for up to $1 billion.

https://cointelegraph.com/news/bitfinex-official-doc-confirms-plans-to-raise-up-to-1-billion-in-ieo-for-its-token-leo

If their plan is successful I think it's the end of the world. Who would in their right mind throw their money around to Bitfinex when they can't even provide enough transparency about Tether or their withdrawal issues. $1 billion, that definitely sounds a massive amount of money to cover their insolvency (just a hunch).

And what more, that $1 billion is only used to prepare the launch of their own token! What a waste of money.

And they already have their token, tether.

This token crazy is bad for bitcoin in my opinion.... Why would they need 1 billion to launch a token? Unless it's something like tether, which need to be backed up, that's far too much money, more than necessary

For me it's strange to "leak" this kind of information intentionally. Maybe it's a FOMO situation, so people can feel safer and nothing more?

The first thing coming to my mind while reading the paragraph was "LOL, good way to catch fresh money". Could it be an efficient way for them to back up the supposed debt Tether/Bitfinex? Fees cost nothing for an exchange pov. so they won't lose a lot and it gives a direct capital.
With what's going on, you'd have to be crazy to be involved with finex.

As per the article:


LOL, are you willing to invest in that IEO? Very sketchy and I think they know what's coming to them, to need to have a plan B to cover up. So if you are a smart investor, you should know that this is just garbage and this doc is more of hyping it.

People here have proven to not be smart. I have been warning against exchanges like Bitfinex for a long time now and it all seems to be a wasted effort. People somehow want to lose money....

If you think logically (which is difficult for a lot of people here), this exchange and everything related to it isn't even worth a billion, so why should they be able to raise such an amount just to cover some of their debt?

It makes zero sense at all from a logical perspective. It makes a lot of sense for the operators behind Bitfinex because they can expect one of the best paydays ever without much effort.

Hahaha, what!? After I read the headline I was going to joke about the fact that this is probably just to raise funds because Tether is currently insolvent, but they openly admit it? Wow. Who in their right mind would invest in a token which is openly being launched to cover their 850 million dollar debt from their previous token?

After the endless list of shady activity surrounding Tether, and now this, it's looking more and more like Bitfinex is just a scam.

I am doubting if Bitfinex can be successful on this project of getting as much as $1Billion in exchange for its LEO tokens. The problem with Bitfinex is lack of transparency and investors are always wary of any entity especially in the world of cryptocurrency which do not value honesty and openness. We should not allow an exchange which seems to have the propensity of doing anything it wants without regards to the responsibility they have on their users and other stakeholders. Bitfinex should start showing to the world that it has nothing to hide and that it is complying with the laws of the land...not doing any shenanigan.

Bitfinex's gang doesn't give a shit about anything, and why would they? People time on time again allow themselves to be abused by these con artists.

Once the situation around Tether cools down and people somewhat forget about it, the Bitfinex gang will figure out another way to steal from people.

The weird aspect to all this drama is that Tether actually becomes stronger with how nothing of what they are subjected to is able to get it to implode. I have never seen people be more willing to lose money than here in the crypto space. What a bunch of retards do we have here. Not cool at all.

Its utterly baffling, but not unique to Tether by any means. People were pointing out that Bitconnect was a blatant scam for months before it imploded, and yet the price kept climbing. Half the coins in the top 10 are complete scams, and yet they remain in the top 10.

I suppose what is unique about Tether is that they have openly admitted they are insolvent. Most scams deny it up until the day they run off with everyone's money.

Where did tether admit they are insolvent?

Tether has liquid assets to cover appropriately 74% of tethers and less liquid assets to cover more than the balance.

It is more common for banks to hold liquid assets totaling closer to 10% of deposits.

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It seems as if Bitfinex is going to sell the entire billion dollars worth of coins privately.

https://www.coindesk.com/bitfinex-token-sale-has-lined-up-1-billion-in-commitments-shareholder-says

First they claimed Tether was backed up 1-to-1 with USD. Then the quietly changed it to backed up 1-to-1 with a variety of unnamed assets, including other cryptocurrencies (meaning they can print Tether from thin air, use it to buy bitcoin, and claim the Tether is fully backed up). Then they changed it to backed up 1-to-0.74 with these unnamed assets. Now they launch a new IEO which they admit is to cover the $850 million shortfall in Tether.

Yes, but Tether isn't a bank. They stated, quite clearly, that Tether was backed up 1-to-1 with USD reserves. We know now that was a blatant lie.

With the current situation and hot water Bitfinex has plunged itself in, I don't think someone in their right mind would willing partake in their IEO. The issues with Tether even up to this day just gives out more and more insights and 'leaks' of its true nature which then lowers the trust of people to the said token, and now this? If anything, I would distance myself away from such things, and quite possibly convert my Tether into something else, for good.

Exactly, they didn't even cover it and blatantly admitted that they just wanted to raise funds for their Tether debacle. Maybe they think that they can still get away and investors will just pour their money, because they are talking about billions of dollars here.  ;D

@BitHodler - there's a lot of gullible people who still jump on everything when they hear this kind of news. Not reading between the lines, all they see is $$$$ ka-ching, but later on bitch around this community because they have lost so much money, how ironic.

There is no shortfall in tether. Tether owns in excess of $1 of assets for every tether outstanding.

Until tether extended a line of credit to Bitfinex, each tether was backed 1-to-1 with cash like assets. Once tether extended the LOC to bitfinex, each tether was backed 1-to-1 with reserves, but only a portion was cash-like assets.

Your bank account is also backed 1-to-1 with reserves, a small percentage of which is cash like assets, and the majority of which is made up of loans made to various customers.

You have no proof of that, because they have never submitted to an independent audit. You only have their ever changing word to go on, which is worth nothing.

But again, Tether isn't a bank. They widely and very specifically claimed that USDT was backed up 1-to-1 with USD, which they've now admitted was a blatant lie. "Cash like assets" means nothing, since they include other cryptocurrencies in that definition. If they print a hundred million Tether out of thin air and use it to buy Bitcoin, they can claim that Tether is backed up with "cash like assets".

It boggles my mind that people consider outstanding loans to be a form of backing. You no longer have access to these funds. All you are left with is a contractual agreement that the loan will be paid back with x percentage of interest. If every Tether holder will be looking to cash out right now, they can't.

If you can't at any time of the day let every holder of Tether cash out to actual USD, you are just a scam. Coinbase and Circle aren't doing anything with the USD's that back their USDC stablecoin. It's right there sitting in their bank account(s), where they at any time of the day can cover every single withdrawal request to USD. This is how it should be.

https://twitter.com/paoloardoino/status/1127839301218254851

They've already pulled it off according to them. It says the majority came from Ifinex - https://twitter.com/paoloardoino/status/1127856906981261317  which I don't get as Ifinex is, um, them but whatever.

Truly they exist in a parallel universe. I don't care how profitable they are, I wouldn't put my lunch money in.

I find his wording puzzling. "The major part has been raised directly from iFinex. But SPVs and our investors helped in gathering investment from their communities. " Is it just his bad English? He can't possibly mean an insolvent company provided the majority of the funding, can he?

I think he must mean the majority was raised by iFinex. Right?

I would stay out of Bitfinex, no matter how attractive their IEO is. Until they conduct a full professional audit of their funds, I would advise the other users to do the same. Rumors are going around that they lost $850 million in trading. Now what makes matters worse is that the money they used for trading was not theirs. It came from the accounts of their users. I have seen the response from Bitfinex, but it is a bit vague and a lot of questions remains to be answered.

I don't think their word has changed. If you are going to assume their word is worth nothing, there isn't much of a point even discussing their situation.

The NYAG did not explicitly say this, but it appears they verified tether had $1 in cash-like securities prior to giving the loan to Bitfinex for every USDT outstanding. I believe this because the NYAG is very anti-business, and would have pointed it out if there were not cash like reserves.
I don't think "cash like assets" would include bitcoin in their definition, nor do I believe they are holding anything like bitcoin as part of their reserves.

The claim the USDT was backed 1-to-1 with USD was not a lie. The claim was changed to its current form at the time they made the loan.

If you have a bank account with $100 in it, your deposit is exactly as you describe.

If you have a bank account with a billion dollars in it, your bank will almost certainly make you wait seven days (they may delay further) to process a wire withdrawal of a billion dollars. A bank deposit is not backed 1-to-1 with cash by the bank, and will need time to liquidate cash if a customer is making a very large withdrawal.

I speculate most of the other stablecoins invest most of their money in short term US government debt securities verses a bank deposit.

So lets me get this correctly.
USDT was truly backed 1:1 with USD and the NYAG verified it. Until the loan to Bitfinex.
USDT is now backed with what is claimed on the website.
So why it was so hard to publish an audit during all this time? If they wanted to hide something ok but if it wasn't the case, then why?
USDT is now backed on the Bitfinex loan: backed to something that may never come, not really different to the fractional reserve.

It is not that simple. The NYAG claims that as of now USDT is 74% backed up with cash or cash equivalents. On top of that there is a line of credit agreement for $900 million with Bitfinex, which lasts for 3 years at an annual interest rate of 6.5%. Out of that $625 million is claimed to have been transferred already. Now this doesn't mean that USDT was 100% backed up prior to the loan. It also doesn't mean that the funds already transferred to Bitfinex came from the cash reserves of USDT (need some clarity on this).

The Bitfinex official statement mentions that around $850 million in customer funds were made "temporarily" inaccessible by the authorities. But the NYAG has said that this is false.

This is very confusing situation for me. I just have one advise for all. Stay out of Bitfinex and USDT, until they conduct a third party audit.

https://www.coindesk.com/tether-confirms-relationship-auditor-dissolved

I've no idea what a proper audit consists of, but it may be nothing like the type of thing we're used to. There might be liability issues and monstrous amounts of detail and info needed.

As I recall, Tether actually changed its terms to reflect this months ago. Very few people took notice, although I saw a thread about it at the time. It looks like they changed the terms when the loan took place. From the looks of it, the AG wasn't being entirely forthright in its claims, but regardless, Bitfinex had to go into damage control mode once the news broke.


Their legal counsel came out and said (https://coincentral.com/each-tether-is-backed-by-usd-unofficial-audit-claims/) that the major auditing firms won't touch them. They have made some attempts to provide alternative proof (https://www.coindesk.com/deltec-chairman-says-tether-letter-on-bank-relationship-is-authentic).

Suuureee!  Very rich very smart people are gonna send a billion dollars to a company that lost 850 million dollars entrusting it to a money laundering operation.      ::) ;D

I would encourage everyone to view the letter they released here: https://tether.to/wp-content/uploads/2018/11/Tether-Letter.pdf. To me, it looks even worse than if they had said nothing. An unheard of bank based in a tax haven. "Portfolio cash value" was deliberately worded to ensure that it didn't imply 1-to-1 with USD, which Tether were still claiming at the time of release. "Based on information"? Information from who? Verified how? It has no names and no signatories.

It reads like something which could have been written by a child in under 15 minutes.

It is on Deltec's letter head,  the letter was released very publicly, and Deltec did not refute the letter. Based on this, I would conclude the letter was in fact written on behalf of Deltec. The name of the person does not matter IMO because it was speaking on behalf of the company, even if this would be unusual in other parts of the world.

Deltec is the name of the Bank tether is/was using. They are disclosing the value of assets held at the bank. I don't see the words "based on information" in the letter.

It would be unusual for an entity to have $1.8 billion in a "checking account" if they are not spending this money on a regular basis. I would expect most of this money to be invested in short term US government (or other very high credit rating) US dollar denominated bonds/notes maturing within a few months, or possibly a series of CDs. 

I'm pretty sure it's unusual anywhere in the world to sign without a name.

I have no doubt the letter was authentic, however -- the chairman of the bank confirmed its authenticity (https://www.coindesk.com/deltec-chairman-says-tether-letter-on-bank-relationship-is-authentic). It's telling that no bank executive wanted to be associated with the letter, though, and they initially would not confirm the relationship existed.


I remember when that letter came out. It looked ridiculous.

At the same time, this was a phase of heavy scrutiny towards Tether. I remember Bitfinex'd was quite popular at the time. They seemed pretty desperate to produce something that showed adequate cash on hand, knowing that they couldn't produce an audit.

If you ask BB&T, or any other bank, if x person or y company has an account/relationship with the bank, they will neither confirm nor deny the existence of any banking relationship. The only exceptions to this is if the customer explicitly allows for such disclosure, or if the bank receives a subpoena, court order, or similar legal process.

You also do not know that "no bank executive wanted to be associated" with the letter because you do not know Deltec's normal processes for producing such letters.

That's the point. Tether obviously requested this letter from Deltec. The fact that Tether published it suggests that Deltec was explicitly allowed to disclose their relationship.

It's reasonable that as a matter of protocol, a bank wouldn't confirm whether any relationship existed. I'm not surprised about that.

But you can't blame people for being skeptical when the letter looks like a grade schooler produced it and then the bank denies that any relationship existed. Bitfinex'd must have felt on top of the world at that point. :D


I'm guessing there is no "normal process" for that. It's a bizarre request.

I think you hit it right on the head a few posts up:

There were a number of news stories in the press speculating about tether's solvency, and I am guessing some number of customers were asking for documentation to support solvency so they can account for keeping money in tethers or on deposit at bitfinex to trade with.

This is my point. I'm not claiming that the letter is counterfeit, or wasn't released by Deltec as Tether stated. I'm claiming that Deltec bank aren't exactly a well known or reputable institution, which is evidenced by the sheer lack of professionalism throughout that letter. The lack of a name and a single wavy line for a signature is just the icing on the cake, so to speak.

This is it exactly. At any point, they could have completely quashed the rumors and silenced their critics immediately by simply submitting to an independent audit. Their continued refusal to do so was shady enough in and of itself, and this letter did nothing to address those (now confirmed) rumors.

https://www.theblockcrypto.com/2019/05/21/tether-admits-in-court-to-investing-some-of-its-reserves-in-bitcoin/

This affair just keeps on giving. Ifinex admit to putting some of Tether's reserves into buying BTC as everyone loves 'backing' that stable.

I cannae wait for this cancer to be plopped in the dish and fed into the incinerator.

The article has the actual transcript at the bottom. On page 27, "Miller" (David Miller, attorney for Bitfinex/Tether) talks about how money is fungible and that there are no separate bank accounts for money holding reserves and corporate money comprised of profits, or money that is excess capital.

Tether is a crypto company, and I have every reason to believe every crypto company has some company money invested in bitcoin.

apparently this story was blown way out of proportion. when i first saw the headlines about this, i was ready to fling endless shit at tether. i assumed this was surely confirmation they were, in fact, manipulating the market and running a fractional reserve/shadow bank.

as it turns out, they own ~0.075 BTC, which they need to process USDT transactions using the omni protocol. see here: https://twitter.com/alistairmilne/status/1130941040460992513

If this is the extent that Tether owns bitcoin, it probably would have been better to mention the bitcoin owned was used to pay transaction fees, or business expenses that can only be paid in bitcoin as opposed to an investment.

That geezer is a flat out out and out Bitfinex shill. I'd be interested in hearing it from anyone other than him. If it's only from him then it's suspect in the extreme. If it was only that it wouldn't have been mentioned in court.

There's the quote from the transcript - “Prior to the April 24th order … Tether actually did invest in instruments beyond cash and cash equivalents, including bitcoin, they bought bitcoin.”

It may not be a significant amount, that's not outlined, but why do we have a price explosion every time Bitfinex has a problem of some sort?

Exactly. When we are talking about deficits of hundreds of millions or even billions of dollars, no judge is going to care about 0.075 BTC (<$600). There is also a big difference between holding bitcoin as it is needed for normal business operations, and investing in to bitcoin, which is what the transcript says. $600 could barely be called an investment for an average citizen - it certainly isn't for a multi billion dollar company.

More details are needed for clarification, but I'd be very surprised if said details were in Tether's favor.

milne's comments were further echoed by bitfinex's CTO: https://twitter.com/paoloardoino/status/1131213750290341889

it would be helpful if they clarified exactly how much they owned at times "prior to the April 24th order". ;D

so maybe they are playing games and cherry-picking the date, but obviously they're publicly sticking to their story that bitcoin is only bought in small amounts to fund mining fees for tether transactions.

When you are testifying under oath, or speaking to a judge as an officer of the court, you need to be sure it is accurate if you say "zero" or "never", most lawyers will say to not give these types of answers, but sometimes that is unavoidable. If the answer is not "zero", you must make the disclosure the amount is non-zero if asked. You cannot give "zero" as an amount just because the amount is insignificant.

I think the bitcoin as described is more accurately described as a "business expense" than an "investment"