Bankruptcy Court Approves BlockFi’s $4.7M Sale of Crypto Mining Rigs

• The mining equipment is spread across Texas, Georgia, Kentucky, Dakota, and Norway.
• BlockFi was forced into bankruptcy last year due to ‘substantial’ exposure to FTX.

BlockFi, one of the dominos that fell after the collapse of FTX, has received the court’s approval to sell some of its crypto mining equipment to refund creditors who lost funds after it went bankrupt.

The U.S. bankruptcy court of New Jersey – overseeing the bankruptcy proceeding of the crypto lender – green-lit the sale of 6,400 mining rigs for $4.7 million to U.S. Farms & Mining Opportunity Fund, per court documents filed March 24.

According to a previous filing, most of the equipment for disposal are Antminers in Texas, Georgia, Kentucky, Dakota, and Norway. An estimated 400 of the rigs were reportedly obtained through foreclosure.

BlockFi filed for Chapter 11 bankruptcy protection in November last year, partly due to links with FTX, which had granted the company several lines of credit, including a $250 million in June 2022. Founder Zac Prince said during the unraveling that the company’s exposure to FTX caused a liquidity crisis.

SEC is also on the long list of BlockFi’s creditors

Before the bankruptcy court, BlockFi listed FTX as its second-largest creditor, owed $275 million, among other 100,000 creditors. Ankura Trust owed $729 million tops BlockFi’s list of creditors, which included the Securities and Exchange Commission (SEC), which fined the lender $100 million for offering unregistered securities.

At the beginning of the year, the bankruptcy court gave potential suitors until February 20 to bid for BlockFi’s assets. The asset auction was scheduled for February 28, and creditors’ representatives were asked to raise any objection before March 16.

The defunct crypto lender has 8,000 Bitcoin mining machines earmarked for disposal in exchange for up to $160 million in loans, according to a report released by Bloomberg in January.

Crypto lenders, then considered the banks of cryptos, peaked during the 2021 boom, gaining popularity with their double-digit interest on crypto deposits. Unlike traditional lenders, the companies did not maintain capital or liquidity reserves. Shortfalls in deposits later caused unprecedented losses to the investors.

Source: Read Full Article