On October 10, Bloomberg News reported that iFinex Inc., the parent company of the cryptocurrency exchange Bitfinex, proposed a $150 million share buyback. iFinex may be attempting to consolidate its private operations and reduce regulatory scrutiny in light of increased regulatory oversight in the cryptocurrency industry.
Last month, iFinex, which shares board members with Tether Holdings Ltd., made a share buyback offer to its shareholders. According to the offer, iFinex is willing to buy back 15 million shares, representing around 9% of its total outstanding capital, at $10 per share. This move would set the company’s valuation at $1.7 billion.
The share buyback offer is contingent on iFinex receiving a substantial cash inflow from one or more of its subsidiary businesses. In 2016, iFinex shareholders obtained stocks through a swap deal with the investment platform BnkToTheFuture. That same year, Bitfinex suffered a security breach resulting in the loss of about $71 million in Bitcoin, which has since appreciated to about $3.3 billion.
To resolve the situation, Bitfinex issued BFX tokens to its users in response to the security breach, and users then swapped them for iFinex shares through BnkToTheFuture. The share buyback offer is open until October 24, with no minimum number of shares required for the deal to take place. Certain directors at iFinex and associated companies, including Giancarlo Devasini, can participate in the buyback.
Furthermore, iFinex informed Bloomberg that it is considering a share buyback due to its recent positive performance. The buyback would provide an opportunity for investors to address and support the Bitfinex Group’s regulatory needs and offer a way for them to cash out their investment in the company.
However, Tether and Bitfinex have had previous run-ins with regulators, notably including U.S. regulators imposing a $42.5 million fine in 2021. The fines targeted Tether for allegedly making misleading statements about the reserves backing USDT and Bitfinex for providing services to U.S. clients without the required licenses.
International authorities have become increasingly focused on regulating crypto ventures operating outside of existing regulatory frameworks, especially in major markets like the U.S., U.K., and EU. Some of these regulations are specifically targeting stablecoins like USDT. The aftermath of events like the FTX collapse has put the crypto industry under intense scrutiny, and major players like Bitfinex are adapting their strategies accordingly.