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Breaking News: Coinbase Confirms DOJ Investigation Following Major Security Incident

LEO Token Pumps Post Bitfinex Bitcoin Seizure, But Why?

Reynaldo Marquez
Reynaldo Marquez
3 years ago
2 mins read
LEO Token Bitfinex hack

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Bitfinex LEO Token has been rallying in the past week, as U.S. authorities allegedly captured the bad actors that took over 100,000 BTC from the platform back in 2016. LEO was created as a utility token as part of a mechanism to compensate the victims of the attack and repaid them for their losses.

Related Reading | Meet The Two Alleged Bitfinex Hackers: Ilya Lichtenstein and Heather Morgan

As of press time, the LEO Token trades at $6 with a 2.4% profit in the last day. On a 30-day basis, the token rallied from a low at $3.50 and reached a high of almost $8 as the news about the capture of Ilya Lichtenstein and Heather Morgan, the alleged hackers, became known.

LEO LEOUSD BTCUSD
LEO with significant gains on the 4-hour chart. Source: LEOUSDT Tradingview

There has been a lot of speculation around whether U.S. authorities will return the stolen funds to Bitfinex. 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. The company acquires a portion of the token equal to a minimum of 27% of the consolidated gross revenues of iFinex, the document claims.

In addition, the LEO Token can be burned if the funds seized in 2015 to their 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.

The other scenario to fuel an LEO Token burn is the crypto exchange recovers the Bitcoin stolen from them in the 2016 hack. At least 80% of the recovered funds will be used to repurchase and burn LEO within the subsequent 18 months from the date of the recovery, as the Whitepaper claims.

Will LEO Token Continue To Record Profits?

The market seems to be pricing-in this scenario and expecting more appreciation as a massive LEO Token burn could lead to a supply shock. However, traders must consider that iFinex and Bitfinex will attempt to prevent any sudden spike in the price of LEO.

This period offers protection from sudden market spikes and will result in a VWAP. For example, a partial recovery of 60,000 BTC at the current market price (1 BTC = approximately $5,000), would bring in $300m. After deducting $30m (for the current outstanding RRTs), $270m would remain. Assuming that $270m was recovered net funds, iFinex would use at least 80% (i.e., at least $216m) to burn LEO tokens.

Related Reading | Bitcoin Stolen From Bitfinex Hack Moved For The First Time In Five Years

As Arcane Research noted, this buyback scenario was highly unexpected by market participants. As seen in the chart below, the LEO token saw a 57% discount to the BTC stolen funds back in October 2021, but now premiums have returned noting the sentiment shift amongst traders.

LEO Token Bitcoin BTC BTCUSD
Source: Arcane Research
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Reynaldo Marquez
Reynaldo Marquez

Reynaldo Marquez

A literature major, Reynaldo Márquez has been deeply immersed in the crypto industry since 2017. His journey began with translating articles for various crypto news outlets, a role he took on with zeal. In 2018, amidst a challenging market, he embraced his first writing assignment, demonstrating his unwavering commitment to the nascent industry and the promise of change it bears for many people worldwide.
In March 2021, he joined the prestigious crypto news outlet NewsBTC and Bitcoinist, where he not only reported on the latest crypto news but also had the privilege of interviewing some of the industry's most influential figures. A year later, his dedication and hard work were recognized, and he was promoted to Managing Editor, a position he currently holds with pride.
He believes in honesty, good communication, hard work, and the power of cryptocurrency and its potential to transform people's lives, especially those alienated by the legacy financial system. Born in 1992 in Venezuela, Reynaldo is familiar with how governments and central banks can negatively affect people, their everyday lives, and their futures by creating inflation and erasing their hopes for a better future. Thus, like many Venezuelans, he embraced this new technology to help him and his family navigate difficult times.
In another life, Reynaldo would have pursued a career as an investigator, most likely tracking down the origins of the Cyberpunk movement with the publication of William Gibson’s ‘Neuromancer.’ The intersection between fiction and reality, with the materialization of Bitcoin in 2009, would have allowed him to dive deep into the crypto sphere as something more than a financial phenomenon but also a cultural shift in society that was brewing since the XX century, and maybe even sooner, in the XIX century with the publication of Henry David Thoreau’s ‘Civil Disobedience.’
But that’s for another life. In this one, Reynaldo has been trading to improve his trading skills. Since 2023, he has been trying to learn Python to create successful strategies and find ways to execute them. It is a difficult task, which continues to keep him busy today and will most likely continue to keep him busy in the near and long term.
In his free time, he enjoys lifting heavy objects, reading, watching movies, and listening to his favorite music. Some of his favorite authors are Walt Whitman, William Faulkner, Allen Ginsberg, James Baldwin, Raymond Carver, Ray Bradbury, George Orwell, Mario Vargas Llosa, Reinaldo Arenas, Rafael Cadenas, and many others. Lately, he has been primarily interested in reading about dystopic societies, a topic that deeply resonates with the crypto industry.
Since 2023, he has lived in Spain with his wife. He loves the weather, the food, and the people and their culture. They both expect to travel much more within the country they now call home and beyond its border. He hopes to retire with his wife, maybe in a quiet place near a beach, but most likely in a city close to a library and a university with his kids and, hopefully, grandkids.

Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.

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Reason to trust

Strict editorial policy that focuses on accuracy, relevance, and impartiality
Created by industry experts and meticulously reviewed
The highest standards in reporting and publishing
How Our News is Made

Strict editorial policy that focuses on accuracy, relevance, and impartiality

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Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.

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