As the bankruptcy hearings involving Core Scientific, the now-bankrupt crypto miner, continue, a recent court filing shows how the firm stopped paying back its debt to lenders. Instead, the mining firm paid about $1.65 million in 2022 to a company with ties to its CEO.
Paying For Air Shuttle
According to the latest court filings concerning the bankruptcy case, the world’s leading Bitcoin mining firm by computing power processed its last payment in October 2022. The said payment was made to Stone Tower Air LLC right before Core Scientific halted the payment of its debts to lenders.
Fast forward to December, and the largest crypto mining platform filed for Chapter 11 bankruptcy protection. According to the airplane tracking website, Airfleets.nets, Stone Tower Air, operates an Embraer ErJ-135BJ Legacy 600 aircraft.
In a statement, Russell Cann, the chief mining officer of Core Scientific, stated that the company employs the service of Stone Tower Air to ensure efficient travel and good time use. Cann added that Stone Air Tower offers charter air flight services that Core Scientific uses to move its employees, customers and potential clients between its data facilities in remote locations.
According to him, the action saves the crypto miner some money and allows its employees to spend more time with their loved ones. Furthermore, the executive noted that CEO Mike Levitt uses the charter air company for his other businesses.
Due to its affiliation with Core Scientific CEO, the company provides the crypto miner with discount rates for its charter services. However, Core Scientific already mentioned the use of the private jet in previous filings, which reveal that the firm had reimbursed some officers and executives of the company for the use of personal aircraft for official businesses.
The Prearranged Bankruptcy
Last December, Russell Cann compared Core Scientific’s bankruptcy filing to Ford and Delta’s rather than FTX’s. In an interview, the chief mining officer explained that he expects the firm to emerge stronger after reorganizing.
Core Scientific operates its own BTC mining rigs and serves as a host to other mining companies. The firm accounts for nearly 10% of the total hashrate of the Bitcoin network.
After months of turmoil that squeezed value out of the crypto market, Core Scientific’s bankruptcy filing was expected by many industry players due to its significant role in the mining sector. However, Cann insists that the firm was still operating and that the bankruptcy filing would allow it to restructure its balance sheet.
Thus, this lends credence to the notion that Core Scientific’s bankruptcy was prearranged rather than a response to market conditions. With the majority backing from its debt holders, the company went into bankruptcy to kickstart its restructuring plan.
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