It doesn't have to be nefarious. OP said it's a foreign investor. A foreign investor probably wants to avoid as much US bureaucracy and taxation as possible.

It doesn't have to be nefarious. OP said it's a foreign investor. A foreign investor probably wants to avoid as much US bureaucracy and taxation as possible. Forming offshore with the US entity as a subsidiary allows the foreign investor to own shares of a non-US entity. The real question for me governing law, and the potential to have to appear in the Caymans if there's a dispute. Maybe it's because I am a lawyer, but I'd rather go to court in Delaware than somewhere outside of the US, but this isn't really my area of knowledge. An attorney more versed in this would have more knowledge about the foreign forum and whether it presents a risk in potential litigation.