Troubled crypto lender BlockFi is planning to sell loans backed by bitcoin mining equipment to stay afloat. Moreover, the company has trouble retaining workers after applying for Chapter 11 bankruptcy protection.
$160m in loans backed by BTC mining machines
However, as rigs quickly get cheaper due to mining difficulty and price fluctuations, BlockFi might find itself in trouble again. Sources told Bloomberg that some loans have already defaulted and could be undercollaterized.
BlockFi struggles to retain essential workers
The insolvent cryptocurrency lender has also submitted a request to adopt a retention scheme for the company’s remaining essential workers to the US Bankruptcy Court for the District of New Jersey on Nov. 28. The program intends to provide remuneration for its top personnel that is either 50% or 10% of the basic income, depending on their function.
In a statement submitted on LinkedIn, Megan Crowell, BlockFi’s chief people officer, said that even if the digital asset business is going through an exceptionally volatile period, players in other industries still have plenty of chances. She believes the talent competition is still intense, and those involved have numerous prospects inside and outside the bitcoin industry.
Objections to the proposal have been sent in by the United States Trustee and the official committee representing unsecured creditors. The hearing for the motion has been delayed several times, and the statement that was filed today notes that the committee representing unsecured creditors is requesting a further extension of the postponement.
Crowell adds that, even though they believed these extensions to be sensible to allow for communication with the U.S. Trustee and the Committee, they have seen both an increase in the number of staff departures and a growing worry around the receipt (and timeliness) of retention payments.
According to the statement, 11 workers have quit their positions between the day the petition was submitted on Nov. 28 and the date the declaration was filed on Jan. 23. The pace of resignations picked up in January. This is despite the massive volatility plaguing the sector, resulting in many crypto firms firing a significant section of their workforce.
The number of compensation packages offered to critical workers has remained relatively high compared to their existing packages. According to Crowell, several people have left the company and gone to work for other companies such as Google, Block Inc., and Walmart.