Singapore-based Bitcoin mining company Poolin on July 22 filed for Chapter 11 bankruptcy protection in New Jersey, alongside its US affiliates Lonestar Dream Inc. and Lonestar Taproot LLC. The firm is also looking for court approval for a $52 million sale of its Texas mining properties.

The bankruptcy filing comes nearly four years after Poolin froze customer withdrawals, leaving thousands of wallet users with IOU tokens and turning a mining business failure into a long-running creditor dispute.

Poolin Enters Chapter 11 With $173 Million in Liabilities

Court records filed in the US Bankruptcy Court for the District of New Jersey show Poolin listed between 10,001 and 25,000 creditors, with petition assets estimated between $1 million and $10 million.

Chief Restructuring Officer Michael DuFrayne’s declaration placed prepetition obligations at about $173.1 million, with roughly $163.7 million tied to unsecured IOUs issued to Poolin Wallet customers.

The company’s current bankruptcy case is focused on selling its Texas assets rather than rebuilding its mining operations. Lonestar Dream stopped mining and hosting activities at its Pyote and Tarbush sites on July 10, according to the filing documents.

Poolin has entered asset purchase agreements with Thor CALAP LLC for a combined $52 million stalking-horse bid. The offer includes $15 million for the Pyote property and associated power rights and equipment, plus $37 million for Tarbush power rights and equipment. The deal remains subject to competing bids and court approvals.

The company spent more than three months marketing the asset, contacting over 335 potential buyers, including cryptocurrency miners and artificial intelligence and high-performance computing operators. The process resulted in 28 confidentiality agreements, seven letters of intent and three additional expressions of interest.

Poolin’s Texas expansion struggled after the company moved mining operations from China as Beijing imposed a ban on mining in the year 2021. It expected to receive up to 600 megawatts of power, but only 100 megawatts were made available. This meant the equipment the firm had bought for its US run ended up being more than was necessary.

Some of that equipment was sold, resulting in a loss of $8.8 million from fiscal year 2023 to 2025. In the end, Lonestar Dream and Lonestar Taproot accumulated about $45.9 million in losses.

The Collapse of Poolin Wallet Remains Central to Creditor Claims

Poolin’s financial problems go beyond mining, as back in June 2022, when Bitcoin fell below $20,000, it triggered margin calls from Tether against collateral the firm had pledged through the Poolin Wallet. It then transferred almost all of that collateral to Antalpha and borrowed about $213 million against crypto assets valued at just under $356 million.

However, in September 2022, Poolin Wallet suspended withdrawals and issued around $163.7 million worth of IOU tokens to customers, with about 11,700 wallet users holding balances above $100, according to the filing.

Bitcoin later fell below $16,800 in November 2022, after which Poolin ceased operations, and Antalpha liquidated the collateral. Management estimated that about $260 million was owed to Antalpha against digital assets valued near $265 million at the time.

Poolin was once one of the largest Bitcoin mining pools globally, reaching roughly 14% of the Bitcoin network’s mining share in 2019. However, the company’s remaining value now depends on the Texas asset sale and the outcome of the bankruptcy process.

The court-supervised auction will determine how much creditors recover, and any distribution will depend on competing bids, sale expenses, administrative claims, and approval of the proposed liquidation plan.

Source: CryptoPotato