Bloomberg has reported that iFinex, one of the companies that operates the cryptocurrency trading platform Bitfinex, is considering investing $150 million in a buyback of shares issued to victims of its 2016 hack. This buyback would value Bitfinex at $1.7 billion.
In 2016, Bitfinex suffered one of the largest hacks of Bitcoin ever, and in response, decided most of its customers should have 30% of the value in their accounts removed and replaced with its BFX token, with each token meant to represent $1 of value.
Reportedly, at least one large client didn’t receive the same haircut. After the hack occurred, Bitfinex promised to have a full financial audit conducted and to share its methodology for calculating the haircut; in the intervening seven years neither have been produced.
In communications to traders after the hack, Bitfinex executives emphasized that their assets weren’t excluded from the haircut, and because Bitfinex executives had so much cryptocurrency on the exchange, they were actually some of the largest holders of the BFX token.
Traders who received the BFX token had the option to wait for Bitfinex to have enough cash available to redeem their BFX, or they could swap their tokens through Simon Dixon’s BnkToTheFuture or with Alistair Milne’s BFXTrust in exchange for equity in iFinex. This buyback seems specifically targeted at those who purchased through BnkToTheFuture.
At the time, Bitfinex and Tether CFO Giancarlo Devasini told users that “the fastest way to get paid back is to convert debt to shares and then sell your shares to another shareholder.”
Bloomberg’s reporting suggests that Bitfinex now views having that many shareholders as a problem, and the document they review specifically hopes it will relieve shareholders of any expectation “to provide information to support the Bitfinex Group’s regulatory applications and to address scrutiny.”
Besides allowing smaller shareholders to exit this illiquid investment, it would also allow executives and directors to cash-out, with Devasini specifically named as someone eligible to take part in the deal.
The reporting does suggest that while this offer has been made, it’s contingent on Bitfinex receiving cash from some of its many subsidiaries.