Bitfinex, one of the world’s largest cryptocurrency exchanges, has had a tumultuous history with the community over its controversial stablecoin, Tether. Tether is a digital currency that is supposed to be pegged to the value of the US dollar. The issue with Tether is that many in the community believe that it is not fully backed by actual US dollars, leading to accusations of fraud and market manipulation. Despite this controversy, Bitfinex has managed to raise over $1 billion in a private sale of its LEO token, demonstrating how even the most divisive issues can be overcome through perseverance and transparency.
The controversy over Tether has been ongoing since its inception in 2014. Tether’s creators, Bitfinex’s parent company, claimed that each Tether token was backed one-to-one by US dollars held in reserve. This backing was supposed to give Tether a stable value and make it a reliable intermediary for trading cryptocurrencies. However, doubts about Tether’s backing began to surface in 2017, when the company’s relationship with its auditor, Friedman LLP, came to an end. Later that year, the Paradise Papers leak revealed that Bitfinex and Tether shared key executives and a bank account in Puerto Rico. This fueled suspicions that Tether was being used to manipulate the cryptocurrency market. Despite these concerns, Bitfinex and Tether continued to operate and grow, becoming important players in the cryptocurrency space. However, the controversy around Tether remained, and Bitfinex found itself in a difficult position. To address these concerns, Bitfinex released a white paper in October 2018, outlining how Tether was backed by a combination of cash, cash equivalents, and other assets.
The company also announced a new partnership with Deltec Bank, which would serve as Tether’s new banking partner. While this move was seen as a step in the right direction by some, many in the community remained skeptical. Bitfinex and Tether were sued by the New York Attorney General’s Office in April 2019, alleging that the companies had covered up a loss of $850 million using Tether reserves. Bitfinex and Tether denied these allegations, but the lawsuit continued to cast a shadow over the companies. Despite these legal and regulatory challenges, Bitfinex and Tether continued to operate and grow, demonstrating remarkable resilience in the face of adversity. In May 2019, Bitfinex launched a token sale for its new LEO token, raising over $1 billion in just ten days.
This private sale was seen as a major success, and demonstrated the community’s continued faith in Bitfinex and Tether. The success of the LEO token sale was due in part to Bitfinex’s commitment to transparency and communication. In the white paper for the LEO token sale, Bitfinex acknowledged the controversy around Tether and the lawsuits it faced, and promised to use the funds raised to address these issues. The company also announced a buyback and burn program for the LEO token, which would help to reduce the token’s supply and increase its value. Despite the controversy surrounding Tether, Bitfinex’s commitment to transparency and communication helped to overcome the community’s doubts and raise over $1 billion in a private sale of its LEO token. This success demonstrates how even the most divisive issues can be overcome through perseverance and transparency. By acknowledging the concerns of the community and committing to addressing them, Bitfinex was able to regain the trust of investors and continue to grow and thrive in the cryptocurrency space.