Reportedly, BlockFia now bankrupt crypto lending company, plans to sell $160 million in loans backed by around 68,000 Bitcoin mining machinesas part of the bankruptcy proceedings.
In a Bloomberg report released on Jan. 24, two people “aware of the matter” they say that BlockFi started the loan sales process last year.
The crypto lender filed for Chapter 11 bankruptcy in November 2022citing its significant exposure to the now-defunct crypto exchange FTX as the cause of the downfall.
According to the sources, however, some of these loans have already defaulted and may be under-collateralized due to the falling price of Bitcoin mining equipment, and the last day to submit offers for the loans is January 24th.
In statements to Cointelegraph, Harrison Dell, a cryptocurrency lawyer and director of Australian law firm Cadena Legal, explained that whether the Bitcoin mining equipment used as collateral is worth less than the value of the loansthis last “they’re not even worth their paper value anymore for BlockFi.”
Dell said there are a lot of people bidding on debt “probably” debt collection companies they shop for “dollar cents”.
He added that the sale of debts is likely “all that administrators” of BlockFi can get for these assets.
Dell also hinted that this is just the beginning of what’s to come for the cryptocurrency industry. He noted:
“This is just the beginning of asset sales by BlockFi and other U.S. Chapter 11 bankruptcy cryptocurrency companies.”
Cointelegraph reached out to BlockFi for comment, but has not received a response as of publishing.
BlockFi’s attempt to liquidate its loans is likely part of efforts to pay off its creditors, which according to the November 2022 bankruptcy file amount to over 100,000.
At the time of bankruptcy, it was reported that BlockFi sold $239 million of its crypto assets to cover bankruptcy expenses and reported that around 70% of its staff would lose their jobs.
Related: BlockFi’s failure triggers numerous reactions from the crypto community
On Jan. 23, BlockFi filed a court petition to release bonus funds for top employees in an effort to keep them in Chapter 11 bankruptcy proceedings.
Megan Crowell, chief people officer of BlockFi, told the court that without financial incentives the company is unlikely to be able to retain its employees.
Crowell added that many employees are highly likely to leave the company without competitive compensation, noting that the company could experience another financial shock in the future.
