Amid numerous bankruptcies in the industry, companies are now selling their assets to either pay back creditors or avoid bankruptcy. In today’s news, bankrupt crypto lending firm BlockFi reportedly wants to sell $160 million in loans backed by about 68,000 Bitcoin mining machines.
Bloomberg reported earlier today, citing two people “familiar with the matter,” that as part of the bankruptcy proceedings, BlockFi already started the process of the sale of the loans last year.
However, some of the loans have already defaulted and seem to be undercollateralized, given the decline in the market prices of Bitcoin mining equipment, according to the sources. Furthermore, the deadline for bidders to submit offers has been slated for Jan. 24.
Crypto lawyer Harrison Dell, director of Australian law firm Cadena Legal, told news outlet Cointelegraph that the people bidding for the debts are likely to be debt collection businesses buying for “cents on the dollar.” The debt is expected to be “all that the administrators” for BlockFi can salvage for these assets.
Dell also added that “This is just the beginning of asset sales from BlockFi and other crypto firms who have already filed for Chapter 11 bankruptcy in the U.S.”
Flashback To BlockFi Bankruptcy Filing
Following the shockwaves created by the collapse of Three Arrows Capital’s hedge fund, the FTX bankruptcy, and the crypto winter that caused low BTC prices, the crypto lender firm, BlockFi, filed for chapter 11 bankruptcy in the U.S. District of New Jersey in November last year citing FTX exposure.
The news came at a time when the crypto market was bleeding from various negative news impacts. According to BlockFi, the liquidity crisis was due to its exposure to FTX via loans to Alameda, as well as its cryptocurrencies held on FTX’s platform that became trapped there. BlockFi listed its assets and liabilities as being between $1 billion and $10 billion.
Part of the creditors the company listed included the U.S. Securities and Exchange Commission (SEC), with an amount of $30 million. As reported by Bitcoinist, the Company owes this amount to the SEC following a case in which BlockFi was ordered to pay over $100 million to the regulator.
The Rise Of Bankrupt Crypto Firms
BlockFi hasn’t been the only crypto firm that filed for bankruptcy since the FTX fallout. Bitcoin mining firm Core scientific and crypto lender Genesis has also registered in the list of bankrupt firms.
Over the last year, more than five respective crypto companies have filed for bankruptcy, including Terraform Labs, Celsius Network, Voyager Digital, Three Arrows Capital (3AC), and FTX.
Although reports claim crypto-related companies are still struggling, the crypto market remains unshaken. Last week, the global crypto market capitalization revisited the $1 trillion benchmark after months of bearish trends.
Bitcoin (BTC), the most dominant cryptocurrency, has surged nearly 40% in the last 30 days and currently trades above the $22,000 region.