What happened
In 2019, cryptocurrency exchange Bitfinex was hacked, and almost 120,000 Bitcoins (BTC -1.77%) were stolen. Most of those have just been recovered, according to today's press release from the U.S. Department of Justice. Valued at roughly $3.6 billion, these Bitcoins represent the largest seizure of funds in history.
And shockingly, it's not Bitcoin that's surging today but rather Unus Sed Leo (LEO). As of 3:30 p.m. ET, Leo crypto tokens were up a whopping 46% over the past 24 hours. And there's a good explanation why.
So what
Leo is a utility token created for the Bitfinex exchange. When Bitfinex was hacked, it did what it could to financially help those who were negatively impacted -- an expensive decision. By issuing up to one billion Leo tokens, the company was able to raise money to help with its suddenly stretched financial situation.
When it created Leo, the company established a system of repurchasing tokens monthly until they were all gone. But in the official white paper -- kind of an equivalent to a prospectus for IPO stocks -- it states that whenever stolen Bitcoin was recovered, it would use at least 95% of those funds to repurchase Leo tokens and burn them. Because of the Department of Justice's announcement today, the value of Leo tokens is skyrocketing in anticipation of this event.
Now what
There's a couple of caveats here. First, there's still legal proceedings, and it's unclear when exactly Bitfinex will receive the recovered Bitcoins. Second, the white paper says that tokens will be burned within 18 months of recovery. So it may take some time for the company to actually repurchase and burn Leo tokens.
