
Hong Kong's iFinex Inc., which owns Bitfinex, has proposed a $150 million share buyback, Bloomberg News reported on Oct.10.
The move is seen as a bid to consolidate its private operations despite increasing regulatory scrutiny in the cryptocurrency industry.
The iFinex company, which has shared board members with the well-known stablecoin issuer Tether Holdings Ltd., made an offer to its shareholders last month.
The plan calls for the sale of shares at 10 cents a share for a total of 15 million shares. The value of iFinex is $1.7 billion and represents about 9% of its total outstanding capital.
However, the proposal demands that iFinex first receive a significant cash inflow from one or more of its subsidiary businesses.
In 2016, iFinex shareholders acquired their stocks through a swap deal with the investment platform BnkToTheFuture. Bitfinex lost about $71 million in Bitcoin in the same year due to a security breach. The current valuation of this amount is about $3.3 billion.
Bitfinex issued BFX tokens to its users at the time, which were later traded through BnkToTheFuture for iFinex shares.
The share buyback offer is effective October 24 and has no minimum stock requirement for the deal to proceed. Some board members of iFinex and its associated companies, including Giancarlo Devasini - CFO of both Bitfinex and Tether - are eligible to participate in this buyback offer.
iFinex said in a statement to Bloomberg that the company is considering a share buyback due to its 'positive performance' in recent years.
The proposed buyback would provide investors with an avenue to address and support Bitfinex Group's burgeoning regulatory requirements. It also provides investors with a lucrative exit strategy from a considerably non-liquid investment.
Tether and Bitfinex have faced regulatory challenges in the past few years. However, they faced a substantial fine of $42.5 million imposed by U.S. regulators in 2021.
The charges were involving Tether's alleged misinformation about deposits supported by its USDT stablecoin and Bitfinex's purported services to U.S. clients without the requisite permissions.
The focus on crypto ventures has been increasing, with international watchdogs increasingly focusing on companies operating outside established regulatory frameworks. This is evident with planned regulations in key regions, such as the U.S., the U.K., and the European Union, geared towards stablecoins like USDT.
With the crypto industry in the spotlight, particularly following events like the collapse of FTX, these strategic moves by major players like Bitfinex underline the sector's evolving dynamics and adaptive strategies.