- BlockFi filed for Chapter 11 bankruptcy in November 2022 citing exposure to the just collapsed FTX.
- The plan to sell off the loans backed by Bitcoin mining machines is part of the bankruptcy proceedings.
- Bidders have until before the end of January to submit offers.
About two months after BlockFi filed for Chapter 11 bankruptcy, the crypto lender now plans to sell off $160 million in loans backed by Bitcoin mining hardware as part of the bankruptcy legal proceedings. In total, the loans are backed by about 68,000 Bitcoin mining machines
Although BlockFi cited FTX’s exposure as the main reason for its bankruptcy, the crypto lender had announced cutting its workforce by 20% in June 2022 citing the crypto prices meltdown. The layoff announcement came days after reports emerged that the lender was in talks to raise funding at a $5 billion valuation.
Bidders have until January 24 to send offers
According to reports from Bloomberg, BlockFi started the process of selling off the Bitcoin mining hardware-backed loans last year. It is believed some of the said loans have already defaulted since then and are candidates for under-collateralization following the drastic decline in the prices of Bitcoin mining hardware.
In an interview with one popular media outlet, crypto lawyer Harrison Dell who is a director at Australian law firm Cadena Legal said that the loans are not worth their paper value to BlockFi if the Bitcoin mining equipment used as collateral is worth less than the value of the loans.
According to Harrison Dell, the people bidding for the loans are most likely debt collection businesses saying that selling the debts is all that BlockFi can do at the moment.
It is believed that BlockFi’s attempt to sell off its loans is likely a part of the lender’s efforts to pay off its creditors who are about 100,000 in total.