• BlockFi plans to liquidate approximately $160 million in loans backed by approximately 68,000 Bitcoin mining machines.
• Crypto lawyer Harrison Dell noted that this is the beginning of more troubles in the industry set to unfold in 2023.
• The increased liquidations could increase the overall sell pressure in Bitcoin and crypto prices.
Troubled crypto firm BlockFi is facing mounting financial woes as it plans to liquidate approximately $160 million in loans backed by approximately 68,000 Bitcoin mining machines. The move comes amid on-chain data that indicates crypto miners are selling both freshly minted Bitcoins and old coins to offset negative balance sheets.
According to two individuals familiar with the situation, some of the loans have already defaulted and are under-collateralized due to low crypto prices. In a statement, crypto lawyer Harrison Dell, Director at Australian law firm Cadena Legal, explained that this is only the beginning of more troubles in the industry set to unfold in 2023.
“This is just the start of the asset sales from BlockFi and other crypto firms in Chapter 11 bankruptcy in the US,” Dell said.
The bidding process began last year and is scheduled to end soon, with debt-collection businesses being the most likely bidders. Furthermore, BlockFi may not have many options for repaying creditors other than asset liquidation. The embattled crypto company is also eyeing a share from the $465 million in SBF’s Robinhood stake that the DoJ anticipates seizing as proceeds of fraud.
The increased liquidations could increase the overall sell pressure in Bitcoin and crypto prices, leading to a further market downturn. As such, investors and traders are advised to exercise caution when trading in the crypto market.
It remains to be seen how the situation will unfold in the upcoming months and how BlockFi will manage to get out of its financial troubles. Nevertheless, it is clear that the firm’s struggles could have a detrimental effect on the overall crypto market.