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Two U.S.-based investors have indirectly purchased Bitfinex’s LEO tokens by exploiting a loophole in the exchange’s policy, CoinDesk reports.
Despite Bitfinex clearly stating in its policy that the token sale would be off-limits for U.S.-based residents and entities, Arrington XRP Capital and Arca have confirmed to the news portal that they have legally acquired LEO tokens via third parties.
Speaking to CoinDesk, Michael Arrington, a partner at Arrington XRP Capital, which is registered in the Cayman Islands, said:
Bitfinex was “strict in not selling to Americans, and even though we aren’t a U.S. fund I don’t think we would have been approved because I’m American. We hit a brick wall trying to do it directly.”
Similar was the case with Arca, which is registered in the British Virgin Islands. A company spokesperson told CoinDesk that the firm has legally obtained LEO tokens through a third party.
2) Disclaimer: @arca owns both ETH & LEO.
— Jeff Dorman, CFA (@jdorman81) July 11, 2019
Disclaimer 2: I fully understand the difference between a protocol and a token, decentralization vs centralization, utility vs security. This argument is purely about risk/reward investing and relative value portfolio construction.
This follows Bitfinex’s recent statement that it prohibited all U.S. individuals from transacting on its platform in August 2017 and U.S. corporates in August 2018. The exchange made this claim in its ongoing legal tussle with the New York Attorney General (NYAG), which accused the former of misusing Tether funds to cover up an $850 million loss.
The most recent development in the ongoing case includes the NYAG alleging that Bitfinex and Tether carried out extensive New York dealings longer than they claimed, providing services to as late as 2019. In response, Bitfinex and Tether submitted multiple filings this week with the companies' general counsel Stuart Hoegner alleging that the exhibits presented by the NYAG “contain a number of inaccurate and misleading assertions.”
Speaking particularly about LEO tokens, Hoegner said:
“LEO tokens were not available to the general public and were not offered to any United States customers or to foreign [eligible contract participants] with shareholders that reside in the United States. LEO tokens also may not be traded on the Bitfinex platform by any United States persons.”
