14 Feb 2022
LEO token pumps following LEA seizure of BTC from 2016 Bitfinex hack
Last Tuesday, news reached the market that 94,636 BTC from the 2016 Bitfinex hack had been recovered by the FBI, IRS, and Homeland, leading to explosive gains in the LEO token.
The seized funds will likely be returned to Bitfinex from the U.S. state as the case progress. At least 80% of the recovered BTC will be used to buy and burn Leo over 18 months after Bitfinex receives the funds.If the funds are converted through daily incremental purchases, the BTC LEO conversion corresponds to 172 BTC worth of daily LEO purchases. Once the process is complete, BTC’s liquid supply will increase by 0.5%, as BTC, previously deemed untouchable by all exchanges, are now available in the market.LEO saw strong price growth following the news. The buy-back process likely caused this, as explained above. The LEO market cap currently sits at $5.5bn while the market value of the seized BTC sits at $3.2 bn, meaning that LEO’s market cap currently sits at a 70% premium to the BTC stack.However, the LEO token has other attributes besides the seized BTC buy and burn property. Namely, a buy-back and burn strategy based on trading volumes on Bitfinex where 27% of the monthly Bitfinex revenues will be used to buy and burn LEO tokens. Thus assessing the fair value of the token is less straightforward than just pricing in the value of the recovered BTC.In October, the LEO token traded at a 57% discount to the 119,754 BTC lost in the hack, which indicates that few in the market anticipated what was to come. However, premiums returned in February as some discovered that the hacked Bitfinex bitcoins were moving in a pattern similar to previous LEA seizures.