Bitfinex’s proprietor is contemplating a $150 million share repurchase as a means of enhancing its operational control over the private company. The reason is more pressing as the emphasis on regulatory aspects continues to grow.
Hong Kong-based iFinex has the same board of directors as Tether Holdings Ltd, the largest stablecoin provider in crypto. They issued a statement informing shareholders of their intention to purchase 15 million shares at $10 per share. This represents 9% of iFinex’s outstanding capital, with a total enterprise value of $1.7 billion. The company would benefit from a capital infusion from its affiliates.
The agreement was for shareholders who purchased iFinex stock in 2016 pursuant to a swap agreement with the investment platform BnkToTheFuture. Approximately $71 million worth of Bitcoin was stolen from Bitfinex via a hacking incident in the same year. The value currently stands at $3.3 billion. Through BnkToTheFuture, Bitfinex exchange proposed the offering of BFX tokens, which iFinex received in exchange for company shares.
The repurchase occurred due to the company’s development in recent years. Tether stated in a press release that the company is distinct from iFinex despite the fact that their shareholders are identical. The CEO of BnkToTheFuture refrained from disclosing additional information.
iFinex asserted that the transfer of the shares would prevent investors from pressing their demands for information disclosure, thereby supporting Bitfinex Group’s regulatory compliance. It is common knowledge that Tether and Bitfinex have previously encountered regulatory issues. In 2021, the companies were required to pay a total sanction of $42.5 million. This was due to allegations that Tether misrepresented the reserves backing its USDT stablecoin. Tether’s USDT is one of the most prominent tokens, with $8.3 billion in circulation. Additionally, it is believed that the corporation collected $3.3 billion in excess capital.
Stablecoins are digital tokens that maintain a 1:1 ratio and are less volatile than the dollar. They are primarily utilized by speculators to transfer funds between exchanges. Focus on the crypto space has gone up due to companies not following regulations. In the United States, the United Kingdom, and the European Union, regulating stablecoins such as USDT and their suppliers has been a priority.
In addition, the bankruptcy of FTX and the lawsuits filed against the company’s founder, Sam Bankman-Fried, have exacerbated the situation.
In the case of iFinex and its affiliates, permission has been granted for participation in the repurchasing. Giancarlo Devasini, the Chief Financial Officer of Tether and Bitfinex, was named as a shareholder who is permitted to participate in the transaction.
iFinex intends to acquire the maximum quantity feasible. The shareholders have until October 24 to determine whether or not they wish to transfer their shares to iFinex.
There has been a substantial growth in the circulation of Tether’s USDT, whereas other stablecoins have not seen a comparable increase. USDT is backed by a reserve of short-term US Treasury bills, which generates a substantial profit for Tether.