iFinex Inc. Proposes $150 Million Shares Buyback Deal For Hack Victims

iFinex Inc., the parent company of the well-known cryptocurrency exchange Bitfinex, has proposed a massive $150 million share buyback plan. The move is aimed at providing the Hong Kong-based company with greater control over its private transactions, especially amid increasing regulation in the crypto industry.

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Offer Details & Target Market

The offer, as per a document witnessed by Bloomberg News, proposes a buyback of $10 per share for a total of 15 million shares, equating to approximately 9% of iFinex’s outstanding capital and valuing the business at $1.7 billion. The proposal targets shareholders who had previously invested in iFinex via an investment platform, BnkToTheFuture, as part of a 2016 swap arrangement. 

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Repaying the BFX Tokens

Notably, in 2016 Bitfinex experienced a significant hack incident that led to approximately $71 million in Bitcoin being stolen. This stolen amount is now approximately worth $3.3 billion. Consequentially, Bitfinex offered BFX tokens to its affected users as a restoration method. These tokens were later redeemed for shares in iFinex via BnkToTheFuture.

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Buyback Motivation & Benefits

The proposed buyback scheme has emerged due to the "positive performance" of iFinex over the past years. If shareholders sell back their shares, according to iFinex, they can potentially ease their increasing pressure to supply information to support Bitfinex Group’s regulatory applications. Additionally, investors can escape from what has been quite an illiquid investment.

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Previous Regulatory Challenges

Both Bitfinex and Tether have dealt with multiple regulatory challenges in the past. In 2021, both companies were fined $42.5 million by US regulatory bodies over allegations that Tether falsely claimed about the reserves backing its USDT stablecoin, and that Bitfinex catered to US-based customers without permissible clearance.

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Growing Spotlight on Crypto Businesses

Crypto-based business operations have attracted increasing attention from regulatory bodies in recent years. Stablecoin issuers, such as USDT, are the subjects of legislative efforts in multiple countries, including the US, the UK, and the European Union. High-profile collapses, such as FTX, have intensified the regulatory scrutiny on the crypto industry.

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Participation & Timeline

A number of directors at iFinex and its subsidiaries are allowed to participate in the buyback. There is no established minimum requirement for the number of shares needed for sale for the buyback proposal to push through. Therefore, iFinex will proceed with buying all available shares until the maximum amount is attained. Investors have until October 24 to decide if they wish to sell their holdings to iFinex.

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