iFinex proposes $150M share buyback from Bitfinex hack victims: Report
Bitfinex hack victims from 2016 received iFinex shares as compensation, as the crypto exchange didn’t have enough cash to make users whole.
Bitfinex’s parent company, iFinex, has proposed buying back $150 million worth of the company’s shares from users who were offered them as compensation for the $71 million hack on the Bitfinex crypto exchange in 2016, according to Bloomberg.
IFinex revealed its plans to buy back the shares in a shareholder letter dated Sept. 22. The digital asset firm offered a price of $10 per share to shareholders for the 15 million shares distributed in the aftermath of the 2016 Bitfinex hack.
Bitfinex lost roughly 36% of its total user balance, all in Bitcoin (BTC), and the crypto exchange didn’t have enough cash to compensate users for their losses at the time. Instead, Bitfinex offered recovery-right-tokens (RRT) and equity in the form of iFinex shares to make the users whole and fill the gap in their balances caused by the hack. Users could choose between these two options.
The iFinex shares were offered as part of a 2016 stock swap deal in collaboration with investing platform BnkToTheFuture. The deal saw affected users get RRT BFX tokens, which iFinex eventually redeemed for shares of its company via BnkToTheFuture. The $10 offering put iFinex’s valuation at $1.7 billion — significantly higher than its self-valuation of $120 million in 2016.
The company said the buyback program reflects its “positive performance” in recent years. Buying back investors’ shares would mean investors could offload a somewhat illiquid investment.
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A handful of directors of iFinex and its affiliates will be qualified to participate in the buyback program. According to the agreement, no minimum number of shares is required for the buyback to proceed. The parent firm claimed it is prepared to purchase as many shares as are made available until the maximum amount is reached. Shareholders have until Oct. 24 to decide whether or not they want to sell their shares to iFinex.
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