Bitfinex’s Token Nearly Doubles, But is it all Fake?

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After allegedly raising $1 billion in a private sale, a share like token by Bitfinex has seen a gradual rise of close to 100%.

Leo opened trading on or around May 21st, just days after the private sale, at about $1 per token.

Now, the ethereum and eos based token is trading at about $1.90 as seen in the featured image above.

That’s on very low volumes for its circa $2 billion market cap of just $5 million, significantly below other $2 billion coins that tend to have trading volumes of $150 million or more.

What is even more strange about this token is its distribution. There is hardly any at all.

Bitfinex's token distribution, June 2019
Bitfinex’s token distribution, June 2019

According to etherscan, Bitfinex itself holds 95% of its own tokens. Raising the question of whether this has been distributed at all or whether there has in fact been any such private sale.

Bitfinex has provided no evidence to that effect, with no one really knowing whether people did really give this legally troubled exchange one billion dollars.

Just as strange might be the fact Coinmarketcap is saying the circulating supply is 1 billion, while Etherscan is saying there are 660,000,000 LEO.

That’s probably because Bitfinex has for some reason decided to have 339.5 million LEO tokens on EOS (still not one billion) where they are a block producing validator/miner.

Bitfinex token on EOS, June 2019
Bitfinex token on EOS, June 2019

The distribution here is even more skewed, with Bitfinex itself holding pretty much 100% when looking at the top four accounts.

Making all of this quite a bit curious especially when you consider Bitfinex claims they are to use 27% of their revenue to burn Leo tokens. Revenue.

https://twitter.com/paoloardoino/status/1141386218258796547

So he concludes “our buy back mechanisms is super-transparent and protective of LEO holders,” but alongside those two options there can be a trillion more, including fake tokens that are fakely burned.

They have a website, for example, where they show Leo tokens are being burned every three hours in their thousands:

Fake looking LEO Bitfinex burns, June 2019
Fake looking LEO Bitfinex burns, June 2019

All of the above are being “burned” on the EOS blockchain, and it does look like these are actually being burned.

The public however has been told these tokens belong to someone, they have been bought by someone.

Considering the distribution that is now very much in doubt, and if that is the case, if we delete 10,000 after we type it here, that’s obviously not burning anything.

That’s especially the case considering such burning is being done every three hours based on 27% of their revenue. Meaning they are claiming they are accounting their revenue ever three hours.

Even if we assume wizness, every three hours burning would presumably be automatic for it does occur down to the second every time.

In which case they would be claiming they have somehow connected Bitfinex’s revenue to the EOS blockchain and have implemented its automatic execution.

Presumably you could do so through Oracles, connecting their database to the blockchain with the burning so occurring automatically, albeit fully within their power to change just how much is burned.

In which case it would be a bit interesting because it is sort of automatic dividends, even though of course we wouldn’t quite be able to verify its veracity for they are the ones who fully control what data is fed to the system. Something to which Ardoino’s reply above applies, but he doesn’t explain what happens if he just ignores the complainers once it looks like he can.

Yet, if we are to analyze with limited information, as far as it stands now, it does look likely the burning is real, just as it does look likely there is cheating.

If we print a billion tokens that no one has bought, but we claim they were all bought to the tune of one billion dollars, and if we burn such tokens that were not bought, but everyone thinks they were bought, then this may well be fraudulent misrepresentation in the selling of a product.

From the distribution of ownership, it does appear somewhat clear that here there was no private sale. If that is indeed the case, then this is at the very least a civil offence.

Yet one has to wonder why they’d make such fraudulent misrepresentation instead of straight out having an Initial Exchange Offering (IEO).

The answers can be many, including the fact there was a bank run so no one would have bought their token especially considering the legal pressure they’re under.

Copyrights Trustnodes.com

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