BlockFi Sells Crypto Assets Amid Bankruptcy
2023.01.24 03:44
BlockFi Sells Crypto Assets Amid Bankruptcy
By Tiffany Smith
Budrigannews.com – According to reports, as part of the bankruptcy process, the crypto lending company BlockFi plans to sell loans worth $160 million that are backed by approximately 68,000 Bitcoin mining machines.
Two people described as “familiar with the matter” in a Bloomberg report on January 24 assert that BlockFi began the process of selling off the loans last year.
In November 2022, the crypto lender filed for Chapter 11 bankruptcy, blaming its demise on its significant exposure to the now-defunct cryptocurrency exchange FTX.
However, according to the sources, some of these loans have already defaulted since then and may not be adequately collateralized due to the decline in the price of Bitcoin mining equipment. Additionally, bidders have until January 24 to submit offers for the loans.
Cryptocurrency lawyer Harrison Dell, director of Australian law firm Cadena Legal, told Cointelegraph that loans are “not worth their paper value anymore to BlockFi” if the value of the Bitcoin mining equipment used as collateral is less than the loans’ value.
Dell stated that debt collection companies buying the debts for “cents on the dollar” are most “likely” to be the bidders.
He went on to say that probably “all that the administrators of BlockFi can salvage for these assets” is selling the debt.
Additionally, Dell suggested that the crypto industry is only getting started with this. He said:
“This is just the beginning of the asset sales from BlockFi and other cryptocurrency companies in the US Chapter 11 bankruptcy.”
According to BlockFi’s bankruptcy filing in November 2022, the company owes over 100,000 creditors. BlockFi’s attempt to liquidate its loans is likely part of its efforts to pay off its creditors.
It was reported that BlockFi sold $239 million of its own cryptocurrency assets at the time of its bankruptcy to pay for the costs of the bankruptcy and warned approximately 70% of its employees that they would lose their jobs.
BlockFi filed a declaration with the court on Jan. 23 requesting that funds be released to enable bonuses for key employees in an effort to retain them during the Chapter 11 bankruptcy proceedings.
Megan Crowell, BlockFi’s chief people officer, told the court that the company won’t be able to keep its employees if it doesn’t have financial incentives.
Crowell noted that the absence of competitive compensation would have a significant impact on the company’s finances in the long run and that many employees would likely leave.
