BlockFi, a cryptocurrency exchange, filed for Chapter 11 bankruptcy on November 28. BlockFi was a victim of the contagion brought on by FTX’s collapse. The bankruptcy of the crypto hedge fund Three Arrows Capital in June coincided with a liquidity issue at the New Jersey-based exchange, which marked the beginning of problems. During the June crisis, former FTX CEO Sam Bankman-Fried offered BlockFi a life raft, but it swiftly deflated as the FTX enterprise collapsed.
Here is the latest update on the Blockfi fiasco.
Blocki wins approval to auction assets
BlockFi has won approval from a New Jersey bankruptcy court to begin auctioning off its bitcoin mining assets. It has suitors looking to purchase all or a portion of the business. In a filing earlier this month, the company stated that it had contacted 106 prospective buyers about purchasing all or a portion of the business. BlockFi’s petition states that it hopes to receive buyer offers by February 20 and end the auction a week later. The company will next submit the motion of sale to the court by March 1 for any agreement it comes to.
The court agreed that the sale of the assets is intended to maximise the recovery and “realizable value” of the corporation. With the court’s approval, more bids for BlockFi’s crypto mining assets are expected to come in.
According to the document, “all qualified bids” were to be sent by the deadline of February 20 to the parties listed in the bidding procedures. The qualifying bidders must submit their bids to the court by March 2 and the representatives of the creditor have until March 16 to oppose the sale of the assets to them.
Why is the bid so important for Blockfi?
BlockFi’s tight deadline is an attempt to get offers as soon as possible in order to capitalize on current market conditions, which have seen most cryptocurrencies rise following months of sideways price action.
According to the newspaper, BlockFi’s lawyer, Francis Petrie, told the court that the business has already received offers for various assets and expects more to come.
On January 24, it was revealed that as part of the bankruptcy procedures, BlockFi has been selling off $160 million in loans backed by over 68,000 Bitcoin mining rigs. Given the state of the cryptocurrency market, some loans were already in default when BlockFi began the process of selling them off last year.
It seems like Blockfi believes that auctioning off as soon as possible would help improve their situation. The situation around the fiasco is likely to improve.