Bitfinex stated that the share buyback offer aims to alleviate the mounting regulatory scrutiny pressure faced by investors.
With the increasing regulatory scrutiny in the cryptocurrency sphere, iFinex, the company behind Bitfinex exchange, has unveiled a $150 million share buyback initiative. This move is designed to safeguard the 2016 hack victims and assert more control over the company’s operations.
Bitfinex’s Share Buyback Strategy
Hong Kong-based iFinex Inc., sharing directors with Tether Holdings Ltd., recently unveiled an enticing proposition to its shareholders on September 22. They extended an offer to acquire 15 million shares at the rate of $10 per share. This buyback encompasses approximately 9% of iFinex’s total outstanding capital and effectively values the firm at $1.7 billion. Notably, this transaction hinges on iFinex securing a financial injection from one of its subsidiaries, as outlined in the proposal.
The offer is exclusively accessible to shareholders who initially obtained iFinex stock through a 2016 swap arrangement with the investment platform, BnkToTheFuture. This arrangement was necessitated by a hack in the same year that resulted in the theft of roughly $71 million in Bitcoin, a sum now valued at approximately $3.3 billion. To compensate affected users, Bitfinex issued BFX tokens, later exchanged for shares in iFinex through BnkToTheFuture.
Notably, several directors within iFinex and its subsidiaries are set to participate in the share buyback. According to a statement given to Bloomberg, iFinex cited the “positive performance” of the company over recent years as the backdrop for this strategic decision.
Furthermore, iFinex emphasized that divesting their shares offers investors a way to alleviate the mounting pressure to provide information to support Bitfinex Group’s regulatory obligations and cope with increased scrutiny. It also provides an exit from an investment with limited liquidity.
Tether and Bitfinex Overcoming Regulatory Hurdles
Both Tether and Bitfinex encountered regulatory challenges in the past, with a significant event occurring in 2021 when they jointly received a $42.5 million fine from U.S. regulators. This penalty was imposed to address allegations that Tether had provided false information regarding the reserves backing its USDT stablecoin. Moreover, Bitfinex was accused of serving U.S. customers without obtaining the required approvals.
Despite these regulatory setbacks, Bitfinex has demonstrated remarkable resilience in the face of market volatility. Simultaneously, it has actively pursued opportunities in international markets. Earlier this year, Bitfinex achieved a notable milestone by becoming the first crypto exchange to secure a license in El Salvador.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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