It would appear that the now-defunct cryptocurrency loan business BlockFi intends to dispose of debts worth approximately $160 million that are guaranteed by approximately 68,000 Bitcoin mining machines as part of the processes for the company to file for bankruptcy protection. These debts are backed by the Bitcoin mining machines themselves.
According to a report that was made public on January 24 by Bloomberg, two people who were characterised as being “familiar with the matter” indicated that BlockFi began the process of getting rid of the debts the previous year. This information was cited in the article.
The cryptocurrency lender submitted their petition for protection from creditors under Chapter 11 of the United States Code in the month of November. The failure of the lending company was attributed, at least in part, to the large exposure it had to the cryptocurrency exchange FTX, which has since closed its doors.
However, the sources claim that some of these loans have already been defaulted on since then, and due to the decline in the price of Bitcoin mining equipment, it is possible that they are undercollateralized. The reports indicate that the day of the 24th of January is the last day that potential loan bidders have until the end of the day to bring in their applications for the financing that is now available.
According to Dell, the fact that debt collection agencies were purchasing the loans for “cents on the dollar” showed that it was likely these agencies that were engaging in the bidding process for the loans. The bidding procedure for the loans is described as “cents on the dollar.”
In addition, he said that the administrators of BlockFi are probably capable of collecting “nothing more” from these assets apart from the cash that was given to them. This was in reference to the debt that was owing to them.
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