Bitfinex against logic as it intends to issue $1 billion LEO tokens

Still mired in controversy over that $850 million loss, the powers at be at Bitfinex have come up with an idea to replace the funds and it’s raising eyebrows for a bounty of reasons. Bitfinex’s solution to try to make whole those who were burned in the hack that led to the losses is to issue more tokens. Specifically, the plan is to issue $1 billion of a token called LEO. Skeptics immediately weighed in as the news of this plan went viral over the weekend. Concerns include the legal troubles plaguing Bitfinex and Tether. Other issues include how such a dump could affect Bitcoin, and how this seems to be a repeat of a squirrely effort the exchange previously embarked on to deal with a hack.

Chinese crypto investor and Bitfinex and Tether shareholder Zhao Dong gave heads up about the plan by publishing the document about it on Twitter this weekend. Plans call for Bitfinex to spend up to 27% of its monthly profits to purchase the tokens. According to the documents, if it manages to get back the $850 million it’s owed by Crypto Capital, it’ll be able to buy back LEO. Crypto Capital is Bitfinex’s money processor and it is at the center of a legal challenge brought by the Southern District of New York. It charges that Crypto Capital played a role in the $850 million loss involving Bitfinex and Tether.

This banter about a billion dollar crypto issuance seems laughable given Bitfinex’s legal woes. At the end of April, New York Attorney General Letitia James obtained a court order to shut down Bitfinex and Tether from operating in the state. At issue is that $850 million loss. Within a day of learning it had to cease operating in New York, Bitfinex and Tether issued rebuttals. They both claim the Attorney General’s move was in bad faith. They wrote: 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. On the contrary, we have been informed that these Crypto Capital amounts are not lost but have been, in fact, seized and safeguarded.