Troubled crypto firm BlockFi plans to liquidate approximately $160 million in loans backed by approximately 68,000 Bitcoin mining machines, according to a report by Bloomberg. The move aligns with on-chain data that indicates crypto miners are selling both freshly minted Bitcoins and old coins to offset negative balance sheets.
According to two individuals familiar with the matter, some of the loans have already defaulted and are under-collateralized due to low crypto prices.
In a statement, crypto lawyer Harrison Dell, Director at Australian law firm Cadena Legal, explained that this is the beginning of more troubles in the industry set to unfold in 2023.
“This is just the start of the asset sales from BlockFi and other crypto firms in Chapter 11 bankruptcy in the US,” Dell said.
While the bidding process began last year and is scheduled to end soon, Dell noted that the people bidding for the debts are most likely to be debt-collection businesses buying for “cents on the dollar.” Moreover, the embattled crypto company may not have many options for repaying creditors other than asset liquidation.
BlokcFi is also eyeing a share from the $465 million in SBF’s Robinhood stake that the DoJ anticipates seizing as proceeds of fraud. The increased liquidations could increase the overall sell pressure in Bitcoin and crypto prices and lead to a larger correction in the near future.
Meanwhile, BlockFi has asked the bankruptcy court in the District of New Jersey to approve bonuses from the $256.9 million restructuring bag to help retain experienced employees who are being acquired by other tech companies like Google and Walmart. However, the court has argued against the request, stating that every dollar spent otherwise could be used to repay distressed creditors.