Bitfinex Publishes White Paper for Exchange Token Offering

Bitcoin White Paper Exchange Token

Leading cryptocurrency exchange Bitfinex has published the official white paper of its new exchange token, ahead of an initial offering the firm hopes will raise up to $1 billion.

The white paper sets out the technical details of the token and how it will work, as well as revealing the exchange intends to launch its own dedicated platform for fundraising via initial exchange offerings, or IEOs.

The white paper confirms reports emerging last week that the firm would be looking to raise up to $1 billion in tether (USDT), through a private sale of tokens which are in effect securities in the company.

It comes after Bitfinex found itself on the receiving end of a lawsuit raised by the New York Attorney General, after the parent firm was alleged to have used funds from its tether reserves to underwrite substantial losses in their exchange business.

Parent company IFinex, which owns both Tether and Bitfinex, was accused of drawing on dollar funds that were being used to back the tether stablecoin to plug a hole in their books following the seizure of some $850 million lost in a deal with a Panama-based crypto bank.

Bitfinex hopes the token issue will raise the funds needed to finance the shortfall, throughout offering investors the chance to buy tokens tied to their services.

According to the white paper, the token will only go on public sale in the event that the private sale falls short of the $1 billion target.

“If fewer than 1 billion USDT tokens are sold by private token sale, the Issuer may thereafter sell remaining tokens at times and in a manner it deems appropriate in its sole discretion, consistent with applicable law.”

The new IEO fundraising platform is expected to follow shortly, with the whitepaper suggesting other firms could start raising capital on the platform from as early as June.

“Projects that successfully raise capital on this platform are subsequently listed on the two exchanges, as permitted by applicable law, and token sale participants receive their subscribed tokens in their exchange wallets. The first token sale is scheduled for June 2019.”

The token offering will be the second time Bitfinex has used this model to raise funds, after repaying all investors and retiring the token used in a previous funding round.

If successful, the model could inspire other companies to attempt to raise funds from exchange token sales.