BlockFi loses $80M due to Core Science bankruptcy

Crypto lending platform BlockFi is on the verge of losing $80 million as crypto miner Core Scientific fails to repay loans, which could lead to BlockFi going bankrupt.

the cause of the incident

Cryptocurrency mining platform Core Scientific has said it wants to evade payments to BlockFi because of equipment funds and promissory notes. The plan was announced along with a SEC filing statement that will set the stage for a complete restructuring of the mining platform.

The filing hit BlockFi hard, sending its shares plummeting as much as 77%. This severe drop has the potential to wipe out all shares and value associated with the company. The implications of the document for the future are also clear, as companies could go bankrupt and investors could lose all their assets.

BlockFi provides loans to the mining platform to help them support their operations, and actively uses assets as collateral to support loan requests. If the borrower is unable to repay the loan, the collateral is withheld and used to cover the loan.

The problem of lending to miners

In the case of mining, it negatively affects creditors (lenders); most miners save their bitcoin mining earnings and use them to pay for ASIC servers to improve their mining activities. This leaves cryptocurrency lending companies facing outstanding debt, forcing them to sue and take drastic action against collateral submitted during the borrowing process.

BlockFi’s chief risk officer, Yuri Mishkin, told Proton that the company has several lending operations in the cryptocurrency space, with mining loans accounting for only a small portion of the company’s revenue. Collateral for mining loans is designated as mining equipment, and similar measures are taken to ensure cooperation between lenders and borrowers within the organization.

A recent case was a company downgrading BlockFi’s investment status. The private equity fund firm claims BlockFi’s Series E warrants are worthless. A warrant is a contract signed between two companies that allows each company to purchase shares at a predetermined and agreed date and time. Private Shares Fund reportedly protested the falling value of BlockFi shares, which lowered the company’s overall rating.

Source of information: Compiled from HERALDSHEETS by 0x information.The copyright belongs to the author Richard Hines and may not be reproduced without permission

Related Posts

Japanese Bank Boss Talks CBDCs and ‘Stablecoins’

Regulated stablecoins and an upcoming central bank Crypto currency (CBDC) can co-exist, the Central Bank of Japan (BoJ) said — and gave the clearest signal yet that Japan will launch a Crypto yen. Japanese outlet CoinPost reported that Bank of Japan Governor…
Read More

Lightning Network-based Kollider exchange goes live

Cryptocurrency firm Kollider has launched a derivatives exchange in the Lightning Network ecosystem after raising $2.35 million in seed funding. we have some big news Today, we are pleased to announce the official public release of Kollider So let’s do a little…
Read More