Bitfinex-backed LEO soars to record high on supply crunch expectations
Unus Sed Leo (LEO) surged by almost 70% on Feb. 9 to reach its record highs as traders assessed the potential of an incoming supply crunch in its market.
The token was issued in 2016 to refinance crypto exchange Bitfinex after it lost about $70 million worth of Bitcoin (BTC) in a hacking incident. In its original whitepaper explaining LEO, Bitfinex had promised that if they could recover the lost funds, they would use 80% of the proceeds to buy back and burn LEO.
On Feb. 8, the U.S. Department of Justice (DOJ) announced that it last week had seized over $3.6 billion worth of Bitcoin stolen — around 94,000 BTC — from Bitfinex in 2016, valued as per the current bitcoin-to-dollar exchange rates. Overall, Bitfinex had lost 119,754 BTC to the hack, meaning the cryptocurrency tied to the incident was worth around $4.5 billion at the time of DOJ's seizure.
Bitfinex confirmed its promise to use the recovered funds to buy back and burn LEO tokens in a statement issued Tuesday, noting that the process would complete within 18 months of the date it receives the amount.
DOJ officials told the press that they plan to set up a court process for victims to reclaim their stolen Bitcoin funds.
Nonetheless, they did not disclose how long the process would take to finish. If past is any indication, crypto refunds tied to exchange-related hacks take time. For instance, victims of Mt. Gox's $460-million hack — from 2013 — are still waiting for their refunds.
But LEO bulls ignored such red flags and went ahead with raising their bids for the token this Tuesday, anticipating that the upcoming supply crunch would make the token more valuable in the long run. As it happened, LEO's price rose to its all-time high of $8.144, only to follow the upside
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