Cryptocurrency lending company BlockFi, which is in the process of bankruptcy, will sell $160 million (about R$830 million) in loans secured by about 68,000 Bitcoin (BTC) miners.
According to a report by Bloomberg, published on Monday (23), the bidding process for the sale of loans began last year. However, the sources told the report that some of the loans may be unsecured due to the low prices of the equipment.
The price of mining rigs has fallen by more than 80% over the course of 2022, mainly due to a drop in bitcoin prices and a rise in energy costs. As a result, this also affected the income of bitcoin miners.
Also according to Bloomberg, the deadline for bidders to submit loan offers to the company expires on Tuesday (24).
BlockFi in judicial recovery
BlockFi has had a significant presence in the mining sector, although the activity is only a minority of the company’s business. The company’s focus was really digital asset lending.
As reported by CriptoFácil, the company filed for Chapter 11 bankruptcy in November last year, shortly after FTX. As a reason for the crisis, BlockFi cited its significant exposure to the now-defunct cryptocurrency exchange FTX.
In a press release, BlockFi stated that the bankruptcy filing was in the context of a “restructuring.” Thus, the company stated that it will continue to operate in the midst of the restructuring process.
FTX and BlockFi have a very close relationship. In June 2022, for example, BlockFi faced a financial crisis, receiving a financial “bailout” with a $400 million credit line from FTX US.
BlockFi’s efforts to repay its loans are likely a result of its attempts to pay off its creditors. The company had more than 100,000 creditors, according to the filing for bankruptcy protection.
BlockFi has already sold $239 million (R$1.2 billion) of its cryptocurrency assets to cover the costs of the lawsuit. In addition, it laid off about 70% of its employees.
In addition to BlockFi, several cryptocurrency companies, including Celsius Network, Genesis, and Voyager Digital, have filed for Chapter 11 bankruptcy protection.
Sam Bankman Fred (SBF) brokerage – under house arrest – filed for bankruptcy last November. It is estimated that the company owes more than $10 billion and has one million creditors.