What is UNUS SED LEO
UNUS SED LEO is a crypto token project of the parent company of the Bitfinex cryptocurrency exchange, iFinex. The token was launched via an initial public offering (IEO) in 2019 following the US government’s seizure of funds held by Crypto Capital, Bitfinex’s former payment processor.
The name „UNUS SED LEO“ is derived from the Latin phrase „One but a lion.“
Leo, which is not the first digital currency launched in iFinex’s tumultuous history, is a two-chain utility token housed in the Etherium and EOS blockchain. Among the many unique aspects of the project, LEO is one of the few cryptocurrencies with a limited lifecycle built into its protocols.
In its IEO, the company was able to raise $1 billion in capital. Token holders receive discounts for trading on iFinex’s platforms.
Redemptions and burns
One of the unique features of the LEO coin is its intentionally limited lifespan. How does UNUS SED LEO work to achieve this? iFinex commits 27% of its gross revenue to a redemption scheme at prevailing market prices until no tokens remain in circulation. Since iFinex owns Tether, it should be assumed that this 27% figure includes the revenue collected through Tether.
The white paper states that 80% of all BTC recovered from the 2016 hack will also go to the buyback scheme. Furthermore, if iFinex ever recovers the funds lost from the seizure of the former Crypto payment processor, 95% of the recovered funds are also earmarked for the buyback scheme.
Before we go a little deeper, we need to learn more about the entities involved. iFinex and Bitfinex. First off, Bitfinex is one of the oldest crypto exchanges, having been launched way back in 2012. Even with its long history, it has suffered many hurdles along the way, mainly caused by platform hacks.
Information leaks, hacks and controversies
To get a true understanding of the LEO coin project, it’s important to understand the history of Bitfinex and Tether. Although both entities claim otherwise, the Paradise Papers leak revealed that Bitfinex and Tether are controlled by the same parent company – British Virgin Islands-based iFinex. Further controversy ensued when Bitfinex and Tether were accused of transferring hundreds of millions of dollars between them to hide Tether’s insufficient fiat reserves.
- In February 2021, the New York State Attorney General’s Office said Bitfinex and Tether had misled customers and the market by overstating their reserves, hiding losses of about $850 million. Penalties of $18.5 million were imposed, and to date Bitfinex has been banned from operating in New York State. The two companies are also required to submit quarterly reports to ensure compliance with these bans and proper separation of the businesses.
- In 2016, the exchange was effectively shut down following a hacking attack that resulted in the theft of nearly 120,000 BTC.
After the hack, Bitfinex was forced to spread these losses across all Bitfinex account holders by crediting customers with the specially created BFX token at a ratio of one BFX to $1. The practice of creating tokens out of thin air to shore up financial losses may seem dubious to some; however, fortunately for the exchange, all BFX tokens were redeemed within eight months. In cooperation with the US government, the recovery of stolen BTC continues to this day.
- In 2016, the exchange also dealt with a fine from the US Commodity Futures Trading Commission (CFTC) for failing to register as a futures commission merchant, prompting a re-evaluation of its business practices.
At the same time, US prosecutors accused iFinex’s parent company of illegally transferring funds to Crypto Capital Corp and attempting to conceal $850 million in losses by covering them with Tether’s USDT reserves.
In response, iFinex announced the creation of the Unus Sed Leo token to cover Tether’s $850 million shortfall.
To make up for the lost money, iFinex revealed plans to gradually buy back the tokens from investors until there are none left in circulation on the market. A transparency initiative has also been launched to allow the crypto community to monitor the progress of the initiative and make sure it meets its stated goals.
Benefits for UNUS SED LEO token owners
The benefits of owning UNUS SED LEO tokens include:
- Saving Bitfinex commissions. All fees for those who own the token will be reduced by 15% for all cryptocurrency pairs.
- Monthly discounts at Bitfinex. Token holders receive a 0.05% discount for every $10,000 in UNUS SED LEO tokens held in the merchant’s balance during the previous month. Calculations are made taking into account each day of the month. The maximum discount is 5%.
- Discount when withdrawing cryptocurrency and fiat money on the Bitfinex exchange. Holders of more than 50 million UNUS SED LEO will receive a discount of up to 25% when withdrawing cryptocurrency. Also, customers of the exchange who will have $50 million in tokens will be able to withdraw up to $2 million per month at no additional charge. Additionally, the surcharge will be reduced from 3% to 2% for each withdrawal of more than $2 million in fiat units per month.
