Poolin Technology, a major Bitcoin mining pool, has filed for Chapter 11 bankruptcy, owing $163.7 million to 11,700 users.
Poolin Technology Files for Chapter 11 Bankruptcy
Poolin Technology Pte. Ltd., a prominent Bitcoin mining pool based in Singapore, has filed for Chapter 11 bankruptcy on July 22. This legal move allows the company to operate under court supervision while it attempts to reorganize or liquidate its assets.
The filing, submitted in the U.S. Bankruptcy Court in New Jersey, involves Poolin and its two U.S. subsidiaries, Lonestar Dream Inc. and Lonestar Taproot LLC. Court documents reveal that Poolin's liabilities exceed $100 million, while its assets are valued at less than $10 million.
At its peak, Poolin was one of the largest mining pools globally, controlling nearly 20% of the Bitcoin network's hashrate. Founded in 2017 by former Bitmain employees Zhibiao "Kevin" Pan, Fa Zhu, and Tianzhao Li, Poolin also offered services like crypto lending and interest-bearing accounts through its Poolin Wallet.
However, the company faced challenges starting in September 2022 when it suspended withdrawals for users of its Poolin Wallet and Pool Account due to liquidity issues amid a market downturn. Instead of providing refunds, Poolin issued IOU tokens to users, which have yet to be redeemed, now forming the bulk of its liabilities.
Approximately 11,700 users are collectively owed $163.7 million, according to Chief Restructuring Officer Michael DuFrayne. The company’s Texas mining operations, managed by Lonestar Dream, halted entirely on July 10 and will not resume.
To address its debts, Poolin is auctioning its two mining facilities in West Texas, with Thor CALAP LLC making a $52 million stalking-horse bid, establishing a minimum for the auction. However, this bid only pertains to the physical mining equipment and does not include the frozen wallet balances owed to users. Since inception, the Texas operations have reported losses of around $45.9 million, plus an additional $8.8 million from selling equipment at reduced prices over the next few fiscal years.
The recovery prospects for the 11,700 IOU holders now largely depend on the results of the upcoming auction, more than three years after their withdrawal requests were initially frozen.
