BlockFi Offers $160M in Bitcoin Miner-backed Loans For Sale

Two months after filing for Chapter 11 bankruptcy in New Jersey, BlockFi now has plans to sell off $160 million in loans backed by around 68,000 Bitcoin (BTC) mining machines. According to a Bloomberg report, the sell-off process started last year as part of its bankruptcy proceedings. Interested bidders have until the 24th of January to submit their proposals.

There are speculations that some of these loans had defaulted since last year and were undercollateralized especially due to the dip in the price of BTC mining equipment. Currently, many believe that BlockFi decided to sell off its loan to enable the company to refund its creditors who are already up to 100,000. Harrison Dell claims that the loans are not as valuable as it is quoted on paper.

Crypto lawyer Harrison Dell who is also a director at Australian law firm Cadena Legal mentioned that if the Bitcoin mining equipment used as collateral is worth less than the value of the loans then the loans are not worth their paper value to BlockFi. He is also of the opinion that those who would signify interest in bidding for these loans are debt-collection organizations that believe that this is BlockFi’s only option.

BlockFi’s Troubles Before FTX Implosion

On Monday, November 28th, BlockFi filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the District of New Jersey.

The filing covered BlockFi and its other eight subsidiaries against any lawsuit from creditors and other enraged parties. BlockFi’s bankruptcy filing happened only a few days after FTX equally filed for the same protection. 

Before filing for bankruptcy, the troubled crypto lender attributed its financial woes to the liquidity crunch and bankruptcy filing of Bahamian-headquartered FTX Derivatives Exchange. However, it is worthy of note that BlockFi had started laying off its staff as far back as June 2022. The company reduced its headcount by 20% in Mid-June citing the extended global recession. 

Also, the bankruptcy probes revealed that Zac Prince BlockFi’s Chief Executive Officer (CEO) had withdrawn over $10 million from the company after receiving a $400 million credit line from FTX in a definitive agreement before it filed for bankruptcy.