March 27, 2024
iFinex proposes a $150M buyback of shares
Latest Cryptocurrency News

Bitfinex Users Offered Share Buyback After 2016 Hack Compensation

Bitfinex’s parent company, iFinex, has suggested a buyback of $150 million worth of its company shares from users who had previously received them as compensation for the $71 million hack on the Bitfinex cryptocurrency exchange in 2016, as outlined in a Bloomberg report.

The intention to repurchase these shares was made public by iFinex through a shareholder letter dated September 22. The digital asset firm has offered a per-share price of $10 for the 15 million shares that were distributed in the aftermath of the 2016 Bitfinex hack.

In 2016, Bitfinex experienced a significant loss, equivalent to about 36% of its total user balance, all denominated in Bitcoin (BTC). However, the cryptocurrency exchange did not possess sufficient cash reserves at the time to fully compensate its users for their losses. Instead, Bitfinex provided an alternative in the form of recovery-right-tokens (RRT) and equity in the shape of iFinex shares to restore the users’ financial equilibrium and address the deficits caused by the hack. Users were presented with the choice between these two compensation options.

The iFinex shares were extended as part of a stock swap agreement in 2016 in collaboration with the investment platform BnkToTheFuture. Under this arrangement, affected users received RRT BFX tokens, which were subsequently redeemed for shares in the iFinex company through BnkToTheFuture. This $10 offering significantly elevated iFinex’s valuation to $1.7 billion, marking a substantial increase compared to its self-valuation of $120 million in 2016. The company asserts that the buyback initiative reflects its recent positive performance. The buyback program enables investors to divest themselves of somewhat illiquid investments. A select group of iFinex directors and affiliates will be eligible to participate in this buyback program.

As per the agreement, there is no specific minimum share requirement for the buyback to proceed. The parent company has expressed its preparedness to acquire as many shares as are offered until the maximum limit is attained. Shareholders have until October 24 to decide whether they wish to sell their shares back to iFinex.

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