Hong Kong-based iFinex Inc., the owner of cryptocurrency exchange Bitfinex, is contemplating a $150 million share buyback. This significant development comes at a time when the crypto industry finds itself under the magnifying glass of regulatory bodies worldwide.
According to a document revealed by Bloomberg News, iFinex extended an offer to its shareholders on September 22, proposing a price of $10 per share for 15 million shares. The buyback, amounting to around 9% of iFinex’s outstanding capital, is contingent on a cash infusion from at least one of its subsidiaries.
A glimpse into the backstory
The buyback offer is directed towards shareholders who acquired iFinex stock through a 2016 swap arrangement with investment platform BnkToTheFuture. This arrangement was a remedial measure following a colossal hack, which saw around $71 million in Bitcoin pilfered from Bitfinex. The stolen Bitcoin’s value has burgeoned to an eye-watering $3.3 billion today. In an endeavor to indemnify users, Bitfinex disbursed BFX tokens, which were later redeemable for iFinex shares via BnkToTheFuture.
iFinex Inc. and Tether Holdings Ltd., the issuer of crypto’s most traded token, Tether (USDT), share directorial seats, although Tether emphasized its distinct identity from iFinex in a statement. Moreover, Simon Dixon, the CEO of BnkToTheFuture, abstained from commenting on this confidential matter.
By retracting their shares, investors would mitigate escalating demands for regulatory information and escape a relatively illiquid investment. The buyback is deemed a reflection of the “positive performance” by the company over recent years, as per iFinex’s statement to Bloomberg. Both Tether and Bitfinex have navigated through regulatory squalls in the past, settling allegations to the tune of $42.5 million in 2021.
As the clock ticks towards the October 24 deadline for shareholders to express their interest, the buyback proposal could potentially steer iFinex towards firmer control amidst tempestuous regulatory climates. Giancarlo Devasini, the CFO for both Tether and Bitfinex, has been identified as a direct shareholder eligible to partake in the buyback deal.
Besides, the share buyback isn’t fettered by a minimum sale threshold, indicating iFinex’s readiness to repurchase as many shares as are tendered until the $150 million cap is hit. The valuation of the company pegged at $1.7 billion, was concocted internally sans third-party corroboration based on diverse business metrics.
Additionally, the circulation of Tether’s USDT has been significant this year, outpacing other stablecoins. The reserve backing USDT primarily comprises short-dated US Treasury bills, translating to profitable returns for Tether amidst high government bond returns.
However, the overarching narrative extends beyond the buyback, plunging into the broader dialogue of regulatory oversight in the crypto realm. The spotlight on stablecoins like USDT is intensifying in various jurisdictions, including the US, the UK, and the European Union, propelling discussions around legislation governing these digital tokens.