Bitfinex's LEO Token Explodes After US Seizes $4B of Bitcoin Lost in 2016 Hack

A token most people in crypto haven’t thought about since it launched in 2019 just rocketed up in value and the moves actually make sense once you dig in.

Bitfinex’s UNUS SED LEO token (LEO) went from trading at $4.97 at 11:34 AM ET to as high as $8.04 at 12:39 PM, according to CoinMarketCap — a new all-time high. The price has since settled down somewhat to $6.84, but the sudden jump appears related to the seizure of stolen crypto assets that formerly belonged to Bitfinex users.

$4B Seized

On Tuesday, the United States Department of Justice announced that it has recovered 94,000 BTC that had been stolen in an Aug. 2016 hack against Bitfinex, a cryptocurrency exchange. Hackers stole 119,754 BTC, worth $72M at the time.

“Today’s arrests, and the department’s largest financial seizure ever, show that cryptocurrency is not a safe haven for criminals,” Deputy Attorney General Lisa O. Monaco said in the DOJ’s statement.

The statement names Ilya Lichtenstein and Heather Morgan as the two it has charged with attempting to launder the stolen property.

The price of Bitcoin at the time was around $625. Today, a single Bitcoin fetches $43,000, meaning the recovered trove is worth more than $4B.

In 2019, Bitfinex sold its LEO token, raising $1B in ten days, according to its CTO. It’s a basic exchange utility token, so using the token on Bitfinex lowers trading fees, according to Crypto News.

LEO Buyback

But the LEO token has one other unique property. In its whitepaper, the firm pledged to use most of any recovered BTC from the hack to purchase LEO on the open market and burn it. The current market cap of LEO on CoinMarketCap is $6.4B (up from $4.75B before the news broke).

The whitepaper says:

“iFinex and its subsidiaries will use an amount equal to at least 80% of the recovered net funds from the Bitfinex hack …. to repurchase and burn outstanding LEO tokens. “

Bitfinex made a number of different crypto instruments that enabled users to mitigate their losses and make bets on an eventual recovery of funds. The 80% figure is calculated after all such obligations and other expenses related to the breach are resolved.

The whitepaper also gives the firm 18 months to dispose of the Bitcoin, allowing it to do so at a time-weighted average price rather than shock the market with one giant sale at a price that could later prove transitory.

In a statement following the news, Bitfinex said, “We want to express our appreciation for the dedication and hard work by the DOJ team that led to this great success. We will continue to support their efforts.”

The name of the LEO token comes from the Latin phrase, “Unus sed leo,” which is from Aesop’s fable “The Lioness,” the moral of which is quality over quantity (the story’s subject has only one child at the time, but it’s a lion).

On that note, there will soon be considerably fewer LEO tokens in circulation if all goes according to the stated plan. The price action today appears to be in reasonable anticipation of a large contraction in the token supply due to this successful law enforcement action.