• BlockFi is liquidating $160 million in loans backed by 68,000 Bitcoin mining machines.
• The move aligns with on-chain data that miners are selling both freshly minted Bitcoins and old coins to offset negative balance sheets.
• Crypto lawyer Harrison Dell believes this is just the beginning of asset sales from BlockFi and other crypto firms in Chapter 11 bankruptcy.
BlockFi, a troubled cryptocurrency firm, is set to liquidate approximately $160 million in loans backed by 68,000 Bitcoin mining machines. The move comes in the wake of negative balance sheets and on-chain data that indicates miners are selling freshly minted Bitcoins and old coins to offset losses.
Crypto lawyer Harrison Dell, Director of Australian law firm Cadena Legal, believes this is only the beginning of more troubles to come in the industry in 2023. According to two individuals familiar with the matter, some of the loans have already defaulted and are under-collateralized due to declining crypto prices.
The bidding process began last year and is scheduled to end soon. People bidding for the debts are most likely to be debt-collection businesses buying for cents on the dollar. Furthermore, BlockFi may not have many options for repaying creditors other than asset liquidation.
The crypto firm is also eyeing a share from the $465 million in SBF’s Robinhood stake that the Department of Justice anticipates seizing as proceeds of fraud. The increased liquidations could increase the overall sell pressure in Bitcoin and crypto prices and lead to a further market downturn.
The situation at BlockFi is a harbinger of what is to come in the industry. As more crypto firms enter Chapter 11 bankruptcy, more asset sales could be seen in the near future. This could have a major impact on the prices of cryptocurrencies and the overall crypto market.
It is important for investors to be aware of the risks associated with investing in cryptocurrencies and be prepared for any potential downturns. Although crypto prices are currently on the rise, investors should exercise caution and keep an eye on any developments that could affect their investments.