Cryptocurrency exchange Bitfinex has revealed a transparency effort that will allow the public to witness the buying back and “burning” of its LEO exchange token.
In an announcement published on June 14, the company said that the UNUS SED LEO Transparency Initiative will enable the public to witness parent company iFinex to use its gross revenues to buy all the LEO tokens in circulation at market rates. The tokens will subsequently be burned or destroyed, as the company finally buys back the purchased tokens that generated $1 billion sales early last month.
Bitfinex seems to have introduced the sale to cover an $850 million loss highlighted by the New York attorney general in April. The AG’s office stated that Bitfinex had concealed the loss of millions through a loan from sister company Tether Ltd, the issuer of the tether stablecoin.
The redemption process was posted at 10.00 UTC Friday. The company said tokens will be burned “every 3 hours until 100% of supply has been taken out of circulation.”
Through a dedicated dashboard, Bitfinex assured the public that it will provide “real-time insights into all collected platform fees, and subsequent LEO burns” as the LEO buyback progresses.
Furthermore, the company explained:
“We have decided upon a continuous burning mechanism – verifiable and in real-time – to keep the process as fair as possible for our users. As our revenues flow in continuously, we felt that the fairest approach to token buybacks would be one built around continuous and constant redemptions. We are doing this to remove the possibility of uncertainty from LEO holders, subsequently allowing our community to track iFinex revenues, as well as LEO token burn quantities, in an open manner.”
The initial stage of the burn process only consists of revenue from trading fees. The exchange, however, said it considers including “all revenue streams” in the coming weeks.
Responding to NYAG’s claim that the firm had lost $850 million, Bitfinex said that the funds are intact on a payments platform dubbed Crypto Capital.
The company said through the announcement that any funds recovered from Crypto Capital would be utilized to buy and burn LEO tokens, as would an amount worth “at least 80% of recovered net funds” from its 2016’s $80 million hack.