After admitting to raiding the reserves of the Tether stablecoin to cover a stolen $850 million, Bitfinex is now looking to raise $1 billion in a so-called “initial exchange offering.”

The news of Bitfinex and Tether’s parent company, iFinex Inc., raising money via an IEO came via Chief Executive Officer Dong Zhao sharing details of the offering on Twitter.

The shared document claims that iFinex is seeking to raise $1 billion in an offering of “LEO.” That’s a new “utility” token that will become the main transaction cryptocurrency on the Bitfinex exchange, replacing Tether.

Zhao noted that the documents are not a formal white paper, but the not-white paper promises that buyers of LEO will enjoy reduced crypto-to-crypto trading fees on Bitfinex and iFinex’s related exchange EOSfinex. In addition, the offering promises that the LEO token will grant lower lending fees, withdrawal fee discounts and a fee reduction on derivatives trading. Although it’s open to people in most countries, the IEO offering is not open to residents of the U.S. and Canada.

To be fair, the company is being open with its intent when it comes to the reason behind the IEO: It’s to cover the $850 million allegedly stolen by Crypto Capital Corp. The openness of Bitfinex and iFenex is a forced hand, however.

The New York Attorney General’s office filed a lawsuit against the company April 25 alleging that it had engaged in “undisclosed, conflicted transactions to cover Bitfinex’s losses by transferring money out of Tether reserve funds.”

In a follow-up filing April 30, the company admitted to dipping into Tether funds to cover the loss. That admission is notable as Tether, as a stablecoin, is in theory meant to have the same amount of hard currency held against its issued tokens. Bitfinex claims that there’s no legal obligation for a stablecoin to hold hard currency reserves against its issued tokens.

In a twist, the not-white paper also notes that the LEO tokens will be repurchased as the company recoups its loses.

“Bitfinex will be re-purchasing LEO on a monthly basis at the market price using at least 27% of iFinex’s consolidated gross revenue from the previous month — until 100 million or fewer LEO are left,” Sludgefeed reported.

Despite investors previously acting adversely to Bitfinex/Tether news, the price of bitcoin hasn’t done so this year. As of 10:45 p.m. EDT, bitcoin was trading at $5,648.20, down slightly after breaking $5,800 earlier in the day, its highest level in 2019.

Image: 30478819@N08/Flickr