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Analysis

LEO Token Pumps Post Bitfinex Bitcoin Seizure, But Why?

Bitfinex LEO Token has been rallying previously week, as U.S. authorities allegedly captured the dangerous actors that took over 100,000 BTC from the platform again in 2016. LEO was created as a utility token as a part of a mechanism to compensate the victims of the assault and repaid them for his or her 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% revenue within the final day. On a 30-day foundation, the token rallied from a low at $3.50 and reached a excessive of just about $8 because the information concerning the seize of Ilya Lichtenstein and Heather Morgan, the alleged hackers, grew to become recognized.

LEO LEOUSD BTCUSD
LEO with important positive aspects on the 4-hour chart. Source: LEOUSDT Tradingview

There has been plenty of hypothesis round whether or not U.S. authorities will return the stolen funds to Bitfinex. The funds are present worth at over $3 billion and will gasoline LEO’s burning mechanism, based on a latest report from Arcane Research.

As defined on the LEO Token Whitepaper, iFinex, the mother or father firm behind the crypto trade, buys again the token on a month-to-month foundation and proceeds to “burn them” by eradicating them from the market. The firm acquires a portion of the token equal to a minimal of 27% of the consolidated gross revenues of iFinex, the doc claims.

In addition, the LEO Token could be burned if the funds seized in 2015 to their accomplice Crypto Capital, a fee processor, are returned. These have been topic to a “partial government seizure” and Bitfinex has been working to launch them since 2018.

The different state of affairs to gasoline an LEO Token burn is the crypto trade recovers the Bitcoin stolen from them within the 2016 hack. At least 80% of the recovered funds will likely be used to repurchase and burn LEO throughout the subsequent 18 months from the date of the restoration, because the Whitepaper claims.

Will LEO Token Continue To Record Profits?

The market appears to be pricing-in this state of affairs and anticipating extra appreciation as an enormous LEO Token burn may result in a provide shock. However, merchants should take into account that iFinex and Bitfinex will try to stop any sudden spike within the price of LEO.

This interval gives safety from sudden market spikes and can lead to a VWAP. For instance, a partial restoration of 60,000 BTC on the present market price (1 BTC = roughly $5,000), would herald $300m. After deducting $30m (for the present excellent RRTs), $270m would stay. Assuming that $270m was recovered web funds, iFinex would use not less than 80% (i.e., not less than $216m) to burn LEO tokens.

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

As Arcane Research famous, this buyback state of affairs was extremely sudden by market members. As seen within the chart under, the LEO token noticed a 57% low cost to the BTC stolen funds again in October 2021, however now premiums have returned noting the sentiment shift amongst merchants.

LEO Token Bitcoin BTC BTCUSD
Source: Arcane Research

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