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Article source: odaily Planet Daily
On May 8, cryptocurrency exchange bitfinex officially released leo's official white paper.
Previously, Bitfinex shareholder and founder of DGROUP, Zhao Dong, had published a draft version Chinese the white paper on Weibo, but there were still many differences between the two. Odaily Planet Daily has sorted out nine highlights of the official white paper for readers.
In the previous draft of the Chinese edition, leo was distributed to users worldwide. However, the latest white paper puts the U.S. region, U.S. users, and other prohibited persons (officially without explanation) on the "blacklist" of leo private placement.
(draft of the Chinese edition)
(Home of the new white paper)
This change is understandable. Bitfinex, Tether and their parent company, ifinex, are offshore companies registered outside the United States (BVI). According to the regulations, if you engage in virtual currency-related business in New York State, you need to get a license issued by the state Department of Financial Services and comply with relevant regulations, but neither Bitfinex nor Tether has a relevant license. In addition, Bitfinex is being reviewed by the New York State Attorney General's Office for misappropriating deposits from Tether (both parent companies are ifinex) users. For policy reasons, bitfinex makes sense to exclude the U.S. and its users.
The first page of the new whitepaper also replaces the wording with "initial trading platform offering of leo tokens for ifinex trading platforms, products and services", which only points out the use of leo tokens, but blurs the issuer.
(New cover)
And the new version of the white paper said that the issuer of leo tokens is not bitfinex and ifinex, but a newly established entity company, the company named unus sed leo limited, registered in the British Virgin Islands, specially established for the issuance of leo tokens, limited assets, no business operations.
(Screenshot of white paper)
This means that bitfinex and ifinex will withdraw themselves from the risk of issuing coins, and once the leo token is seriously lost in the future, bitfinex and ifinex will not bear the main responsibility for investors to protect their rights.
In the previous draft of the Chinese version, the background of leo's issuance was that bitfinex assets were frozen, and many investors understood that leo was issued to raise funds for repayment. However, the new white paper notes that leo's proceeds can be used for working capital and general business purposes, including capital expenditures, operating expenses, debt servicing and other recapitalization activities.
The new white paper notes that leo has a private placement price of 1 USDT and issuers are considering accepting other forms of asset purchases; in addition, bitfinex will place the LEO:USDT trading pair on the shelves after the private placement is closed, which also means that its price will fluctuate.
(odaily Planet Daily Note: In 2016, bitfinex had a coin theft incident, in order to repay the debt, bfx was issued, the price was 1 US dollar, and finally the official still redeemed at a price of 1 US dollar; bfx can also be converted into bitfinex equity. Many investors believe that the leo issued this time is similar to bfx and is also a bond coin, but the leo redemption price is based on the market price; and from the following point of view, leo can not be converted into equity, just a reduction in the fee. ）
The previous draft of the Chinese edition stated that the leo private placement was until May 10, 2019; after the private placement, if there was a share, it would be publicly offered.
(Chinese Draft Version)
However, the new white paper changes this statement, first by postponing the private placement time by one day until May 11, 2019; secondly, if there are remaining tokens after the private placement is completed, "then the issuer may sell the remaining tokens from time to time in accordance with applicable law and in such manner as it deems appropriate." “
(New White Paper)
"In the way it deems appropriate", as well as the "issuer's own decision to sell in a way and at a time" that appears earlier in the white paper, are very subjective and can be seen as the possibility of the issuer entering the secondary market for selling.
Regarding the leo repurchase policy, the new version of the white paper is basically consistent with the draft of the Chinese version:
The repurchase period will be on a monthly basis, with x% of the previous monthly profit of all ifinex services repo leo at market price, x% at least 27%;
(At least) 95% of the net assets unfreezed will be used to repurchase and destroy the corresponding number of leos, and ifinex has the right to phase out the repurchase and destruction within 18 months after the assets are unfreezed, with the aim of avoiding market volatility.
Future return of the stolen Bitcoin net assets (at least) 80% will be used to repurchase and destroy the corresponding number of leos, ifinex has the right to gradually complete the repurchase and destruction within 18 months after the return of the stolen Bitcoins, with the aim of avoiding market volatility.
(Note: Net assets refer to the number of assets remaining after deducting all legal, operational, etc. expenses)
However, regarding the repurchase cycle, it has caused controversy. Previously Chinese draft stipulated "no deadline limit", and the new version of the white paper is "until no tokens are in commercial circulation" (until no tokens enter the commercial circulation)
Trader Alberttheking posted that the new formulation leaves a hole for bitfinex.
"The bfx wording leaves a lot of room for themselves. Imagine if in the future bfx does not want to pay dividends because the profit is too high, or because the trouble has been solved and does not want to pay dividends, it can achieve no tokens are in commercial circulation through various clever means. For example, when the leo trading volume is small, the upgrade system cancels all pending orders, and no leo sell orders appear within half an hour after the resumption of operation, saying that no tokens are in commercial circulation has been reached, then they do not need to continue to pay dividends (repurchases). ”
Chinese draft stipulates that leo's function is to reduce transaction fees and loan fees, and the function of leo in the new version of the white paper has basically not changed significantly, but at the end of each provision, a clause has been added: due to fee changes or other reasons, bitfinex can decide whether to reduce the fee at its own discretion.
(Screenshot of the new version of the white paper)
In addition, there are differences regarding specific cost changes:
The draft version stipulates that when any number of leo holders trade, the taker feel of all crypto-to-crypto trading pairs is reduced by 15% compared to crypto-to-fiat trading pairs; the new white paper changes the rate to "15%^5" (about 0.7 per 10,000);
The draft version stipulates that transaction fees can be accumulated, but the new version of the white paper stipulates that the fee discount is 25% online, and the discount is valid for 30 days, and will be re-billed after 30 days;
The use of leo has become narrower: the draft version stipulates that in addition to bitfinex, leo holders can also enjoy similar benefits on betfinex, ethfinex, eosfinex, etc.; the new version of the white paper states that eosfinex will provide similar discounts for leo token holders, and that the ifinex trading platform, products and services are expected to provide similar fee reductions or other features and benefits for leo token holders in the future.
Regarding leo's specific reduction of fees, the two also have the same expression:
bitfinex lending fee: for every $10,000 worth of leo held by a p2p lender in the past 1 month, the lending fee is reduced by 0.05%, capped at 5%;
bitfinex Withdrawal & Recharge Fee: Leo holders will receive up to 25% off withdrawal & deposit fees, with a fee of 2% for withdrawals of more than $50 million worth of LEO, a fee of $2 million per month, and a fee of 2% (originally 3%).
Bitfinex derivative taker fee: For every $10,000 leo held in the last 1 month, the lending fee is reduced by 1 bps (basis point) to a ceiling of 2 bps (basis points).
The new white paper also reveals ifinex's revenue last year, with a full-year net profit of $418.2 million and a shareholder dividend of $261 million.
According to the new white paper, in 2017, the ifinex & bitfinex team grew from 35 to about 60 people; in 2018, the number of people expanded from 60 to 90 people; as of May 1, 2019, ifinex & bitfinex had more than 100 entire team members, of which the development team had only 25 employees. These employees are distributed around the world and work in a 7*24 (24 hours a day, 7 days a week) distributed collaboration.
"During the downturn in market activity, we did not reduce the number of people. We receive hundreds of job letters every month, but we pay more attention to quality. The white paper reads.
Compared with other head exchanges, ifinex & bitfinex's development team is "stretched", we can't help but wonder whether such a team can support the development responsibility?
White Skin explains that the ifinex & bitfinex team is well up to the task of development. Although sometimes development needs to start from scratch, the development team completes the development task at a fraction of the outsourcing price. For example, the upcoming bitfinex derivative platform is designed and developed completely by the bitfinex team.
However, ifinex also pointed out in the report that the earnings report is unaudited, the leo token has investment risks, and the white paper does not have legal effect.
The new white paper also reviews past crises and responses to the ifinex & bitfinex team.
Hackers steal money
On August 2, 2016, bitfinex was hacked to steal 119756 bitcoins (then market capitalized at $60 million). This is the largest theft since the Mentougou mt.gox incident. At that time, the exchange was stolen by hackers from time to time, and in the face of huge losses that were almost impossible to recover, many exchanges could only give up.
But bitfinex took several steps, both saving the platform and allowing users to recover their losses in less than a year. First, bitfinex aggregates the losses of all accounts and distributes bfx tokens to the users who lost money in the ratio of 1 USD to 1 BFX. Within 8 months of the security breach, all bfx token holders were redeemed at full ($1) in bfx.
In addition, Bitfinex also issued rrt (recovery right token), which can convert bfx tokens into equity in ifinex, and some holders (dgroup founder Zhao Dong) have obtained ifinex equity through this conversion. Notably, all bfx tokens are eventually redeemed and burned.
In addition, according to the regulations at the time, when future stolen assets are recovered, since Bitfinex has repaid all the debts, the rrt holder can distribute the recovered funds, and one rrt can be divided into up to $1.
The white paper reveals that bitfinex is still actively working with local law enforcement agencies around the world, tracking and confiscating stolen bitcoins once they reach any exchange or business.
On February 25, 2019, with the assistance of the US government, Bitfinex recovered 28 bitcoins and converted them into US dollars and distributed them to rrt holders in accordance with the regulations.
In addition, the company has partnered with industry leaders to create a program that would allow hackers the opportunity, safely, and privately to return most of the stolen funds, while keeping a portion of the funds in return for a "return." However, bitfinex cannot guarantee that these strategies will be successful.
crypto capital
According to the new white paper, bitfinex established a partnership with a payment provider called Crypto Capital in early 2015. Immediately after a U.S. payment agency disrupted service, Bitfinex strengthened its partnership with Crypto Capital.
In late summer 2018, Crypto Capital told Bitfinex that the funds in its custody had been seized by some governments, though it expected to be released soon.
By the end of 2018, Bitfinex was increasingly concerned that crypto capital might not be able to return the funds in escrow, so it began lending money (in this case, borrowing tether's capital turnover).
In the whiteskin, Bitfinex said it is actively negotiating with multiple jurisdictions around the world to expedite the unfreezing of funds, although Bitfinex is uncertain whether it will be able to recover the funds.