January 24 is the deadline for bidders to submit proposals for bitcoin machine-backed loans.
Bankrupt crypto lender BlockFi is reportedly planning to sell $160 million in debt backed by about 68,000 bitcoin mining machines as part of its bankruptcy proceedings.
On Jan. 24, Bloomberg reported that two people “familiar with the matter” claimed BlockFi began the process of selling debt last year.
The crypto lender filed for Chapter 11 bankruptcy in November, citing its significant exposure to now-defunct crypto exchange FTX for its downfall
Since then, however, some of these loans have defaulted and may be less collateralized given the fall in the value of bitcoin mining equipment, sources said, the last day for bidders to submit proposals for loans is Jan. 24 is
In a note to Cointelegraph, crypto lawyer Harrison Dale — director of Australian law firm Cadena Legal — explained that if the value of bitcoin mining equipment used as collateral falls below the value of the loan, the loan’s “now They have no paper value Blockify ”.
Bidders on loans may be debt collection businesses that buy for “cents of the dollar,” Dale said.
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He added that the debt sale is likely “all that the administrator” can salvage for the property.
Dell also hinted that this is just the beginning of what is to come for the crypto industry. He observed that:
“This is just the beginning of asset sales to crypto firms like BlockFi in Chapter 11 bankruptcy in the US.”
Cointelgraph reached out to BlockFi for comment but did not receive a response at the time of publication.
Blockfi’s attempt to write off its debt is likely part of its efforts to repay its creditors, who number more than 100,000 according to its November bankruptcy filing
At the time of the bankruptcy, it was revealed that Blockfi sold $239 million of its cryptocurrency assets to cover bankruptcy costs, and about 70% of its employees are warning that they will lose their jobs
Related: Blockfi bankruptcy filing triggers a wide range of community responses
Earlier this week, Blockfi petitioned the court in a Jan. 23 announcement to release funds to allow bonuses for key employees amid Chapter 11 bankruptcy proceedings.
Megan Crowell, BlockFi’s chief public officer, told the court it was unlikely the company would be able to retain its employees without financial incentives.
Crowell said it’s highly likely that many employees will leave the company without competitive compensation, given that this would lead to further financial clout for the company down the road.
