Key Points:
- iFinex proposes a $150 million buyback to bolster company control.
- Tether and Bitfinex faced U.S. fines totaling $42.5 million in 2021.
- Bitfinex emphasizes Bitcoin as a core long-term investment strategy.
In the face of escalating regulatory oversight, iFinex Inc., the parent company of the renowned crypto exchange Bitfinex, is proposing repurchasing shares worth $150 million. This strategic move is geared toward solidifying the company’s control while providing an exit option for existing investors grappling with increased regulatory requirements.
iFinex’s Strategic Share Buyback Amidst Regulatory Turbulence
Hong Kong’s iFinex aims to purchase around 9% of its outstanding capital through this buyback initiative. As outlined in a report by Bloomberg, the details of this proposal, dispatched to shareholders on September 22, pinpoint the share price at $10, placing the company’s valuation at an impressive $1.7 billion.
While iFinex’s performance in recent years has been commendable, this buyback isn’t merely a testament to their success. It also serves as a solution for investors, helping them navigate the rising demands tied to Bitfinex Group’s regulatory endeavors. Essentially, this could be a potential escape route for those who find their investments becoming increasingly illiquid in the face of scrutiny.
The intricate relationship between iFinex and Tether Holdings Ltd., the issuer of the heavily traded USDT crypto token, further complicates the story. In the previous year, regulators in the US slapped Tether and Bitfinex with fines amounting to $42.5 million. The charges? Tether allegedly provided misleading information regarding its USDT stablecoin reserves, while Bitfinex reportedly dealt with US clients without the necessary permissions. Notably, the circulation of Tether’s USDT has surged this year, even as other stablecoins have witnessed a market share dip.
Past Challenges and Bitfinex’s Future Outlook
An additional layer to this buyback initiative is iFinex’s attempt to put some distance from its past challenges. A cyberattack in 2016 saw Bitfinex parting with $71 million worth of BTC. To rectify this, the company issued BFX tokens to the affected clientele. These were eventually exchanged for iFinex shares via the BnkToTheFuture platform. The current buyback proposal targets those who secured iFinex shares through this 2016 arrangement.
As the deadline of October 24 looms, shareholders must decide whether to part with their holdings, a pivotal moment for iFinex in its pursuit of greater independence in an intricate regulatory landscape.
Furthermore, Bitfinex has underscored its faith in Bitcoin. Though they haven’t disclosed exact numbers, they regard Bitcoin as a long-term investment. Paolo Ardoino, Bitfinex’s CTO, champions the idea of crypto exchanges plowing profits back into Bitcoin, echoing Bitfinex’s strong belief in the digital asset. Tether is reportedly eyeing a shift from U.S. government debt, with plans to redirect up to 15% of its profits to Bitcoin.
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