Bitfinex launched its new IEO platform. It charges no upfront listing fees and promises to enable “anyone to participate in quality token sales in a fair environment.”
Bitfinex is making headlines again. After the company’s legal battle with the New York Attorney General’s office over the past weeks, this time there is more positive news: Bitfinex announced a private sale and the launch of an Initial Exchange Offering (IEO) platform called “Tokinex.”
Indeed, Bitfinex seems to be weathering out the fallout with the New York Attorney General office. They conducted a private sale behind closed doors of the utility token UNUS SED LEO for ten days.
The crypto community was aware of the token sales, but there was no further information up until the release of white paper on May 8th for the $1 billion exchange token sale.
On Bitfinex’s blog a couple of days later, they stated:
“A newly formed subsidiary of iFinex, Unus Sed Leo Limited (USL), commenced on May 8th, 2019 to sell up to 1 billion USDt of newly created UNUS SED LEO tokens in a private sale to selected purchasers meeting the qualifications described in the token sale documentation.”
Bitfinex is proud to announce the upcoming distribution of UNUS SED LEO tokens to participants following completion of $1bn contribution.https://t.co/JkGiq2Bn6k
Trading against BTC, USD, USDt, EOS, and ETH will commence on Monday May 20th, at 08:00 UTC on Bitfinex.
— Bitfinex (@bitfinex) May 17, 2019
They also revealed the launch of a dedicated platform for projects to raise funds via initial exchange offerings (IEO). One of the benefits offered by the LEO token is reduced fees across much of the Bitfinex and the iFinex ecosystem, and preferential treatment in any future token sales held on their new IEO platform: Tokenix.
IEOs: Exchange-listed ICOs that promise higher security standards
An IEO is an exchange-listed ICO. The only difference is the role of the exchange. The issuing company will negotiate an agreement with the exchange platform that will list the primary issuance of the project token. Thus, the exchange will conduct due diligence, putting its reputation on the line in case the project turns out a fraud.
IEO investors open an account with the exchange, go through KYC and ALM processes and can then purchase tokens directly from the exchange. Through the exchange’s involvement, IEOs are supposed to add an additional security element and fraud protection to token offerings, resulting in increased investor confidence.
Besides increased investor protection, IEOs offer issuers the opportunity to leverage an exchange’s existing user base and benefit from increased liquidity. On the flipside, issuers will have to pay significant listing fees and trade commissions.
Tokinex will not charge upfront fees; issuers hope for a more democratic selection process
Tokinex is being developed by both Bitfinex and its Ethereum-based sister company Ethfinex. Other major exchanges have launched IEO platforms as well, for example, Binance Launchpad, Huobi Prime, or KuCoin Spotlight.
A key differentiator of Tokinex will be the absence of upfront listing fees. Bitfinex CEO Jean Louis van der Velde explains, “Tokinex brings the opportunity for anyone to participate in quality token sales in a fair environment, and for tokens to gain exposure to Bitfinex and Ethfinex users with no upfront cost.”
According to the white paper:
“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.”
Eventually, Tokinex will make its money from trade commissions. Thus, its monetization model incentivizes the exchange to only select projects that will attract sufficient investment volumes.
That sparks hope among crypto projects that Tokinex might have a more “democratic” selection process, as the company will look more at a project’s sales potential that its ability to pay for upfront fees.
Trading on Bitfinex and Ethfinex
Tokens will be listed on both Bitfinex and Ethfinex, suggesting a focus on Ethereum-based coins. KYC will be done via the Blockpass mobile app. Both exchanges will plug in Blockpass to send tokens directly to the users’ wallets no matter which exchange they use.
The first token sale on Tokinex will be announced tomorrow, May 23rd. As per a report, the first IEO will start raising funds in June and “qualified” persons with an Ethfinex or a Bitfinex personal account will be able to participate in pre-vetted token sales.
Van der Velde sees IEOs as the next evolutionary step of the crypto market.
“What it means to be an exchange has evolved alongside the maturing crypto market. It has become an entire ecosystem, not just limited to the remit of trading digital assets,” he says.
The project looks promising, but the proof of the pudding is in the eating. Highly inspired by Binance’s Launchpad in 2017, its feasibility and credibility are under scrutiny as the exchange powers through the lawsuit and continues to rally on disrupting the crypto world.