Bitfinex LEO Token rallied in the last week as U.S. authorities captured the criminals that stole over 100,000 BTC from this platform in 2016. LEO was originally created to be a utility token and to pay the injured.
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LEO Token traded at $6, with a profit of 2.4% in the final day. Over the last 30 days, the token rallied to $6 from $3.50, and then reached almost $8 when the story about Heather Morgan and Ilya Lightenstein, the hackers, was made public.
The question of whether Bitfinex will be returned the funds stolen by U.S. officials has raised a lot. The funds are current value at over $3 billion and could fuel LEO’s burning mechanism, according to a recent report from Arcane Research.
As explained on the LEO Token Whitepaper, iFinex, the parent company behind the crypto exchange, buys back the token on a monthly basis and proceeds to “burn them” by removing them from the market. According to the documents, the company buys a part of the token at a minimum 27% of consolidated net revenues.
The LEO Token may also be destroyed if funds that were seized by Crypto Capital in 2015 and given to its partner Crypto Capital (a payment processor) are returned. These were subject to a “partial government seizure” and Bitfinex has been working to release them since 2018.
A crypto exchange that recovers Bitcoin taken from them during the hack in 2016 is another scenario for LEO Token fuel. According to the Whitepaper, at least 80% will be used for LEO repurchase or burn within 18 months of the recovery date.
Will LEO Token Continue To Record Profits?
As a result, the market appears to expect more appreciation. A large LEO Token burning could trigger a supply shock. However traders should remember that Bitfinex and iFinex will try to stop any sudden rise in LEO’s price.
The VWAP will provide protection against sudden spikes in the market and offer some security. A partial recovery of 60,000 BTC, at current market prices (1 BTC equals approximately $5,000), could bring in $300m. There would still be $270m after deducting $30m for outstanding RRTs. Assuming $270m net was recovered, iFinex could use at most 80% of that amount (i.e. at least $216m), to purchase LEO tokens.
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Arcane Research stated that market participants were surprised by this buyback scenario. Below is a chart showing that LEO token had a discount of 57% on the BTC stolen funds. But now premiums have returned, noting the sentiment shift between traders.
