Bitfinex cryptocurrency surges 59% after fund recovery
10 February, 2022
The cryptocurrency known as Unus Sed Leo, which was issued in part to recapitalise the Bitfinex exchange following a 2016 hack, surged more than 50 per cent after the US announced most of the stolen funds were recovered.
The company iFinex, which operates Bitfinex and is affiliated with the Tether stablecoin, issued Leo in 2019 to beef up its coffers after a series of blows, including the hack in which it lost Bitcoin currently valued at $4.5 billion.
In its white paper explaining Leo, Bitfinex promised if the funds from the hack are ever recovered, it will use an amount equal to at least 80 per cent of recovered net funds to repurchase and burn outstanding LEO tokens within 18 months of the funds’ recovery.
Bitfinex confirmed its commitment to use the funds in this way on Tuesday.
Leo’s price jumped 59 per cent to $7.91, according to data on CoinMarketCap. That has swelled the total market value of the token to about $7.2bn, up from less than $2bn when it was issued.
US residents weren’t allowed to participate in the initial token sale. Bitcoin fell about 2.3 per cent to $43,134.
The Department of Justice announced on Monday it recovered $3.6bn worth of Bitcoin from the hack in the largest financial seizure ever and arrested two people.
“This is very likely to have a major impact on future sophisticated and institutional investors' evaluation of counterparty risk in the space,” said Stephane Ouellette, chief executive and co-founder of institutional cryptocurrency platform FRNT Financial.
“To know that even a hack from a more nascent time in the industry six years ago can be resolved will be mind-changing insight for many.”
In a briefing for reporters, Justice Department officials said they plan to establish a court process for victims to reclaim the stolen Bitcoin.
If history is any guide, any recovery may take time. Creditors of the defunct cryptocurrency exchange Mt. Gox are still waiting to receive reimbursements under a plan that became final and binding in November.
Mt. Gox was once the world’s biggest Bitcoin exchange, until it closed in early 2014 after losing the coins of thousands of customers.
Following the 2016 hack, Bitfinex created BFX tokens and gave them to affected customers at the rate of one coin for each $1 lost. Within eight months of the security breach, Bitfinex’s parent company, iFinex, redeemed all the BFX tokens with dollars or by exchanging the cryptocurrency for shares of its capital stock.
Bitfinex also created a tradeable RRT token for certain BFX holders that converted BFX tokens into shares of iFinex.
Once Bitfinex gets the recovered funds, it’s now promising to make a distribution to RRT holders of up to one dollar per RRT, which may or may not belong to original customers who lost their Bitcoin.
Price of RRT tokens trading on Bitfinex exchange tripled on the news.
Source: www.thenationalnews.com
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