Poolin bankruptcy puts frozen Bitcoin wallet debts in court
Poolin filed for Chapter 11 with $163.7 million owed to wallet users and a $52 million bid for its Texas mining sites.
By Dev Ramirez · Crypto Correspondent
· 3 min read
Poolin bankruptcy proceedings have put one of Bitcoin mining’s former heavyweights into a court-run wind-down, with thousands of wallet users listed as major creditors. For retail crypto investors, the case is a reminder that yield products and custodial wallets can create credit risk even when they are tied to Bitcoin mining.
Poolin Technology Pte. Ltd., based in Singapore, filed for Chapter 11 protection on July 22 in the U.S. Bankruptcy Court for the District of New Jersey, according to court documents. The filing also includes two U.S. affiliates, Lonestar Dream Inc. and Lonestar Taproot LLC.
Chapter 11 is a U.S. bankruptcy process that lets a company keep operating under court supervision while it restructures, sells assets or winds down. In Poolin’s case, court materials say the company is seeking to sell remaining assets and shut down operations.
What happened in the Poolin bankruptcy?
Court documents list Poolin with pre-bankruptcy obligations of more than $100 million and assets of less than $10 million. The largest specific debt is tied to Poolin Wallet users: about 11,700 holders are owed $163.7 million, according to a declaration from Chief Restructuring Officer Michael DuFrayne.
Those claims trace back to 2022, when Poolin froze withdrawals for Poolin Wallet and Pool Account customers. At the time, the company said it was facing “liquidity issues” after a wave of withdrawal requests during the broader crypto downturn. Poolin later issued IOU tokens as stand-ins for actual Bitcoin, but the debts were not repaid, according to the bankruptcy materials.
Poolin began in Beijing in 2017. It was founded by Zhibiao “Kevin” Pan, Fa Zhu and Tianzhao Li, who had previously worked at mining-hardware company Bitmain. The company grew into one of the world’s largest Bitcoin mining pools and, at its peak, controlled nearly one-fifth of global Bitcoin hashrate, according to CoinDesk.
A mining pool lets miners combine hashrate, the computing power used to process Bitcoin transactions and compete for new block rewards. By pooling machines together, miners can receive steadier payouts than they might get by mining alone.
What assets are being sold?
Poolin is trying to sell two West Texas mining sites through a court-supervised auction. Thor CALAP LLC has submitted a $52 million stalking-horse bid, according to reports cited in the bankruptcy coverage. A stalking-horse bid is the first formal offer in a bankruptcy sale and sets the minimum price that competing bidders must beat.
The bid covers physical mining infrastructure, not the frozen wallet balances. That means the proposed sale price is far below the $163.7 million listed as owed to wallet users.
Poolin’s Texas mining and hosting business, operated through Lonestar Dream, stopped operating on July 10, according to the company’s court materials. Poolin said it does not plan to restart those operations.
The Texas units had already generated about $45.9 million in losses since opening, according to the bankruptcy materials. The company also recorded another $8.8 million in losses from selling equipment at discounted prices between fiscal 2023 and the bankruptcy filing.
This story draws on original reporting from Decrypt.
