(Bloomberg) -- The cryptocurrency known as Unus Sed Leo, which was issued in part to recapitalize the Bitfinex exchange following a 2016 hack, surged more than 50% after the U.S. announced that most of the stolen funds were recovered.
The firm iFinex, which operates Bitfinex and is affiliated with the Tether stablecoin, issued Leo in 2019 to beef up its coffers after a series of blows, including the hack in which it lost Bitcoin currently valued at $4.5 billion. In its white paper explaining Leo, Bitfinex promised that if the funds from the hack are ever recovered, it will use an amount equal to at least 80% of recovered net funds to repurchase and burn outstanding LEO tokens within 18 months of the funds’ recovery. Bitfinex confirmed its commitment to use the funds in this way in a statement Tuesday.
Leo’s price jumped 59% to $7.91, according to data on CoinMarketCap. That has swelled the total market value of the token to about $7.2 billion, up from less than $2 billion when it was issued. U.S. residents weren’t allowed to participate in the initial token sale. Bitcoin fell about 2.3% to $43,134.
The Department of Justice announced Monday that it recovered $3.6 billion worth of Bitcoin from the hack in the largest financial seizure ever, and arrest two people.
“This is very likely to have a major impact on future sophisticated and institutional investors evaluation of counterparty risk in the space,” said Stephane Ouellette, chief executive and co-founder of institutional crypto-platform FRNT Financial. “To know that even a hack from a more nascent time in the industry 6-years ago can be resolved will be mind-changing insight for many.”
In a briefing for reporters, Justice Department officials said they plan to establish a court process for victims to reclaim the stolen Bitcoin.
If history is any guide, any recovery may take time. Creditors of the defunct crypto exchange Mt. Gox are still waiting to receive reimbursements under a plan that became final and binding in November. Mt. Gox was once the world’s biggest Bitcoin exchange, until it closed in early 2014 after losing the coins of thousands of customers.
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