iFinex, the parent company of Bitfinex, proposed to buy back $150 million worth of company stock from users as compensation for the $71 million hacking attack on the Bitfinex cryptocurrency exchange in 2016. according to to Bloomberg.
IFinex disclosed plans to buy back shares in a shareholder letter on September 22. The digital asset company offered shareholders $10 per share for the 15 million shares allocated following the 2016 Bitfinex hack.
Bitfinex lost approximately 36% of its user balances, all in Bitcoin (BTC), and the cryptocurrency exchange did not have enough cash at the time to compensate users for their losses. Instead, Bitfinex is offering Recovery Rights Tokens (RRT) and equity in the form of iFinex shares to make users whole and fill balance gaps caused by the hack. Users can choose between these two options.
iFinex shares were offered as part of a stock swap deal conducted in 2016 in partnership with investment platform BnkToTheFuture. In this transaction, the affected users received RRT BFX tokens, which iFinex eventually exchanged for company shares through BnkToTheFuture. The $10 offering values iFinex at $1.7 billion, well above its 2016 self-valuation of $120 million.
The company said the buyback program reflected its “positive performance” in recent years. Buying back an investor’s stock means the investor can sell off less liquid investments.
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A small number of directors of iFinex and its affiliates will be eligible to participate in the buyback program. Under the agreement, there is no minimum quantity requirement for the buyback to proceed. The parent company claims to be prepared to purchase as many shares as possible until the maximum amount is reached. Shareholders have until October 24 to decide whether to sell their shares to iFinex.
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