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Price Of Bitfinex’s Native Token Skyrockets Following DoJ’s BTC Seizure

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Recently, the US DoJ revealed that it has helped Bitfinex recover 94K BTC (valued at $3.2B) following a hack of the platform nearly 6 years ago.

LEO Price’s Massive Surge Within 24 Hours

Within a short period, after this news became public, the platform’s native token price surged to a new peak price of $8.15 on Coinmarketcap. But it has undergone a slight price correction and now trades at $7.32 on Coinmarketcap. LEO has made an impressive 55% price surge despite this corrected price in the last 24 hours, with nearly 85% of the trading volume occurring on the FTX and Bitfinex exchanges.

LEO Price chart. Source: Decrypt

Bitfinex launched its governance token (LEO) about three years ago. LEO is also the utility token on all Bitfinex’s affiliate platforms, with LEO holders enjoying several benefits such as fewer transaction charges and discounts on various Bitfinex services.

Following the token launch, iFinex (owners of Bitfinex) sold freshly-minted LEO tokens to the tune of $1B after the tokens were converted to USDT. This generated amount would cover an $850m loss to crypto capital. 

After the DoJ announcement, the surge in LEO price pushed the tokens up in the crypto rankings as it’s now ranked 24th. Bitfinex exchange was hacked six years ago, with the hackers carting away nearly 120K BTC. However, a joint task force between all law enforcement agencies saw them recover 94K BTC ($3.65B based on BTC’s current price). 

The law enforcement agents also apprehended a man and his wife for their alleged role in the scandal. The government alleged that the couple committed a conspiracy to launder money and defraud the country. Each of which attracts a 20-year and 5-year prison sentence, respectively.

Redeeming A Pledge

There is a little information investors need to be aware of regarding the recent seizure announcement. Bitfinex released a new white paper after the hacking incident where it pledged that it would purchase LEO tokens with 80% of any recovered BTC and burn it. Releasing an official statement on Tuesday after the DoJ announcement, Bitfinex reiterated its commitment to redeeming this pledge.

Part of that white paper release stated that “if Bitfinex receives part or all of the stolen BTC, it will use the equivalent of 80% of recovered BTC to purchase LEO tokens. Then, burn them within one and a half years of receiving the stolen BTC.”

The announcement further states that Bitfinex will make the repurchases on the open market and OTC markets where necessary or even perform a direct BTC-to-LEO swap to have the equivalent LEO tokens from the recovered BTC. As of this writing, the DoJ is yet to release the recovered BTC to the Bitfinex exchange. So, Bitfinex isn’t burning LEO tokens soon.

According to a top-level executive with the exchange, Bitfinex will keep cooperating with the DoJ and law enforcement agencies until the exchange regains custody of the recovered BTC. Also, the exchange will issue a press release once it receives this stolen BTC.

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