Review on Bitfinex by NELSON OTI

Name: Bitfinex
Item: Bitfinex
Rating: 3

July 03, 2019

Bitfinex Loan repayment

The exchange reportedly transferred $100 million to Tether, Inc. to cover a part of its $900 million loan.Bitfinex just reported an improvement of its financial situation - allegedly, the exchange paid back $100 million to Tether, Inc., thus covering a part of its $900 million loan facility. The repayment suggests that Bitfinex is solvent, though it still raised skeptical comments from the crypto community.
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    “Bitfinex is pleased to announce that on July 1, 2019, it repaid $100,000,000 of the outstanding loan facility to Tether. Bitfinex made this payment in fiat wired to Tether’s bank account. This amount was not yet due to be paid to Tether under the facility, but Bitfinex has made the prepayment based upon its financial position at the end of the second quarter of 2019.”
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Bitfinex resorted to the loan after CryptoCapital, its payment provider, saw its bank accounts and assets seized for an ongoing investigation. Bitfinex covered the liquidity gap in two ways - firstly by taking money from its related company, Tether, Inc., and then by issuing Unus Sed Leo (LEO), a token used within the exchange.
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LEO quickly appreciated above its initial nominal price of $1, posting a record at $2. LEO is going through regular ad-hoc burns, which will destroy the entire supply in roughly 50 years. Until now, LEO has seen around 500,000 tokens burned.
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Skeptics comment that Bitfinex has managed to artificially inflate Bitcoin (BTC) market prices, and realize gains on the price of the leading coin. This, in addition to selling LEO, has filled the fiat reserves of the exchange. The price of BTC staged one of its strongest rallies just after the loss of funds was revealed, leading to comments that Bitfinex manipulated the markets to cover the gap.
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The repayment also means that each Tether (USDT) token has gained a bit more fiat backing. After Tether issued the loan to Bitfinex, it became clear that each USDT was backed only 74% by fiat in the bank. The rest of the backing was, in fact, the credit line to Bitfinex.
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The supply of USDT has reached 3.6 billion coins on the Omni layer, and an additional 1.1 billion on the Ethereum network. Bitfinex currently holds just around 24 million USDT, and regularly sends the coins back to the Treasury.
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