Bitfinex offers $150 million share buyback

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Hong Kong-based iFinex, the holding company behind crypto exchange Bitfinex that shares directors with Tether Holdings, has unveiled plans to repurchase $150 million worth of shares, according to recent reports from Bloomberg.

The plan, which aims to allow iFinex to recover more control over the company, comes amid a bid to recover from a past security breach.

In 2016, Bitfinex suffered a hack that resulted in the loss of approximately $71 million worth of Bitcoin. The case remained unsolved until August 2023, when tech entrepreneur and rapper Heather “Razzlekhan” Morgan and husband Ilya Lichtenstein pleaded guilty to money laundering, with U.S. law enforcement saying that Lichtenstein perpetrated Bitfinex’s hack.

iFinex told Bloomberg that the move was taken following “positive performance” by the company over the last few years. While the specifics of the agreement remain undisclosed, the offer is for the company to buy back 15 million shares at $10 a piece, which represents about nine percent of iFinex’s outstanding capital.

The offer depends on the firm receiving cash inflow from one of its subsidiaries to be able to afford the buyback.

A handful of directors at iFinex and its affiliates will be allowed to join the buyback, according to a document retrieved by Bloomberg. This includes Giancarlo Devasini, the chief financial officer for Bitfinex and Tether, who is among one of the four people who controlled 86 percent of Tether in 2018.

There is no minimum number of shares to be put up for sale for the buyback, as iFinex is willing to purchase as many shares as are made available until the maximum amount is met. IFinex’s approach was devised internally based on various business metrics, with no third party involved to assess the company’s worth.

Regulatory issues

In recent years, attention to the crypto industry has increased as government watchdogs have stepped up their regulatory enforcement. This is intensified by the increase in high-profile collapses and fraud scandals, especially the FTX case.

Both Bitfinex and Tether, which share directors, have withstood conflicts with regulatory authorities in the past. They were fined a total of $42.5 million by U.S.-based regulators in 2021 for offering services to U.S. customers without proper approval while Tether lied about its USDT stablecoin reserves.

USDT is a stablecoin, a digital token designed to keep an equal value with less volatile assets like the dollar and is commonly used as an exchange medium and for hedging against price volatility. Legislation has been drafted to oversee the issuance of stablecoins like USDT in key jurisdictions such as the U.S., U.K. and E.U.

The number of Tether’s USDT in circulation has skyrocketed this year as other stablecoins have lost their grip on the market. Tether’s USDT is currently crypto’s most traded token with $83.5 billion in circulation, with the company now amassing $3.3 billion in excess capital, according to data from CoinGecko.

With Tether netting a huge profit while returns on government bonds are high, the company has been utilizing the capital cushion to invest in new projects, such as technology provider Northern Data Group.

Bitfinex itself has demonstrated resilience amid market volatility. It continues to pursue opportunities in foreign markets, such as securing a crypto exchange license in El Salvador.