iFinex Proposes $150M Share Buyback from Bitfinex Hack

By  Noah Washington October 19, 2023

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  • In 2016, Bitfinex suffered a hack resulting in a loss of almost 120,000 bitcoins
  • Bitfinex's parent company, iFinex, compensated victims with shares in the aftermath
  • iFinex has now proposed a $150 million share buyback program for these distributed shares at $10 per share.

In the blockchain industry, security breaches have become an all-too-familiar occurrence. One notable example is the Bitfinex hack of 2016, which sent shockwaves through the crypto community and left many investors reeling.

However, in the aftermath of this breach, a unique and innovative approach to compensating the victims emerged – iFinex shares. This unorthodox solution captured the attention of industry experts and has sparked a lively debate about the future of cryptocurrency security and compensation methods And now iFinex, Bitfinex's parent company, has proposed a massive $150 million share buyback from the very individuals who received these shares as compensation.

Overview of the 2016 Hack

In August 2016, Bitfinex, one of the most prominent cryptocurrency exchanges at the time, fell victim to a devastating hack. The breach resulted in the loss of 119,756 bitcoins from Bitfinex's hot wallets, constituting roughly 36% of the total user balance. This security breach sent shockwaves through the crypto industry, leaving users devastated and demanding redress.

Bitfinex faced a daunting challenge in the aftermath of the hack. Due to the significant loss and the resulting depletion of its cash reserves, the exchange found itself unable to fully compensate users for their losses.

iFinex has surprised the crypto community by proposing the share buyback program. Under this program, iFinex aims to repurchase $150 million worth of shares from those affected by the Bitfinex hack in 2016. The proposal revealed through a shareholder letter dated September 22nd, offers a price of $10 per share for the 15 million shares distributed to victims following the hack. This move has ignited discussions about the motivations behind it and the broader implications for those involved.

Making it Right

The transition from recovery-right-tokens (RRT), which were offered previously to compensate, to iFinex shares was facilitated through a strategic collaboration with BnkToTheFuture.

Through the BnkToTheFuture partnership, affected users were offered RRT BFX tokens, which represented their potential claims against Bitfinex's future earnings. As time progressed and Bitfinex's financial situation improved, these tokens were eventually redeemed for shares in the parent company, iFinex. Notably, this move valued iFinex at $1.7 billion

Price of RRT since late 2018 when it was launched on Bitfinex. Source: CoinGecko

The proposal for a $150 million share buyback comes at a time when iFinex and its affiliated companies have been making notable strides in the cryptocurrency space. These advancements have included technological upgrades, enhanced security measures. and strategic partnerships. This all has contributed to iFinex's positive performance trajectory.

The valuation of iFinex at $1.7 billion marked a remarkable transformation from its humble self-valuation of $120 million in 2016. This dramatic increase in valuation is a testament to the resilience and growth of the crypto industry during this period.

Implications for Bitfinex Hack Victims and Investors

The proposal by iFinex to initiate a $150 million share buyback from Bitfinex hack victims is a significant development that reflects the evolving landscape of the cryptocurrency industry.

As iFinex continues to evolve and strengthen its position in the crypto space, this move may serve as a blueprint for how cryptocurrency exchanges navigate complex situations involving security breaches and compensation. It also underscores the resilience and adaptability of the crypto industry, which has grown exponentially since the Bitfinex hack in 2016.

The crypto community will closely watch the outcomes of this unique share buyback program, as it may have far-reaching implications for both the affected users and the broader cryptocurrency ecosystem.