The idea is that they borrowed BTC to buy mining equipment as long as BTC was steady, or the price went down, they could pay it back in BTC.
Keeping the 1MB seemed to be a way to keep BTC low. Now that it is going up, they are in danger of not being able to pay back the BTC they owe.
You are aware that "fiat" currency is guaranteed by statute to be payment for debts, and that if one holds treasuries that the US government can trade them for dollars at will, no? There's no such thing as the US not being able to pay its debts back, even if the value of a dollar falls over time. BTC is irrelevant. Its market cap is like $11 billion, more or less, with a daily volume in the tens to hundreds of millions. That's not even a blip on the radar in global liquidity, which tops $5 trillion daily. My point is that we shouldn't be making mountains out of mole hills. I'm sure that US and Chinese governments keep an eye on the crypto space, but probably mainly from a law enforcement perspective. It's not a threat to global finance, and as we're seeing today it has a looooong way to go to get there.