BFX Valuation: Conversion To Bitfinex Equity


There’s another potential way to value this Token: iFinex equity. Bitfinex has intimated many times that these Tokens may eventually be redeemable for shares in Bitfinex’s parent company.

Many traders are hoping and praying Bitfinex converts BFX tokens into equity in one or more Bitfinex entities. To them, BFX tokens represent a cheap way to gain exposure to a large Bitcoin exchange.

Unfortunately, this is pure fantasy. Follow the incentives: why would Bitfinex management dilute themselves unnecessarily? BFX tokens have no legal standing. They have no legal obligation to conduct an equity conversion.

Even if Bitfinex equity given was non-voting, why would management want to deal with thousands of small vocal investors? These new minority shareholders could prove to be a big obstacle in obtaining institutional financing. They also could bring legal challenges to decisions made by management. Many jurisdictions are getting serious about the rights of minority shareholders.

I don’t consider it in Bitfinex’s interest to further complicate their capital structure. A BFX to Bitfinex equity conversion is pure Afghan hopium.