U.S.-based crypto mining company Giga Watt has declared bankruptcy, with debts amounting to millions still outstanding to their creditors, according to a filing before a district court in New York.
CoinDesk first reported that the crypto mining firm filed for Chapter 11 bankruptcy in the Eastern District of Washington earlier this week, disclosing some $7 million in debt outstanding to its 20 largest unsecured creditors, who now face little prospect of recovery.
Amongst those affected are Giga Watt’s utilities provider and energy company, who are owed $310,000 and almost $500,000 respectively. Despite liabilities counted in the range of $10-$50 million, the firm reported assets of just $50,000.
The firm first disclosed its position to shareholders at a special meeting on November 18, according to documented minutes released from the meeting. According to the report, “The corporation is insolvent and unable to pay its debts when due…The corporation and its creditors would best be served by reorganization of the corporation under Chapter 11 of the Bankruptcy Code.”
The meeting had been demanded by one of the firm’s directors, Andrey Kuzenny, who also owns 10% of the shares in Giga Watt.
The news comes just 18 months after the firm raised $22 million from its initial coin offering (ICO), which has subsequently faced legal challenge from investors who allege it constituted an unregistered security.
In a separate legal action, the plaintiffs were suing for the return of their capital, citing missed deadlines and broken promises from the firm.
The bankruptcy filing will raise further questions about the management of the firm, and whether the ICO was a legitimate offering in the first place.
The news comes amid some of the most challenging conditions for BTC miners in years. With demand shrinking and prices collapsing, Giga Watt is amongst several other notable mining companies to face significant financial difficulties in recent months.
With the downward trend showing no sign of abating, Giga Watt is unlikely to be the last crypto miner to find it can no longer keep the lights on.
Giga Watt was founded by Dave Carlson, as a way of offering tokenized BTC mining capacity.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
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The Wemovecoins cryptocurrency exchange in Denmark is no more. The exchange provided a platform for users to buy and sell cryptocurrency using a credit card or a bank transfer, but has been forced into bankruptcy. According to the exchange, it was obligated to shut down because of dispute between the company and a credit card vendor.
The dispute led the vendor to refuse to pay the exchange its share of the funds processed by the vendor. According to an article by the Danish tech news outlet Computerworld, Wemovecoins filed for bankruptcy earlier this month. A lawyer working on the case, Niels Juul Mathiasen, “This credit card vendor has withheld the company’s liquidity, [which is] why the company ran out of money and could not continue its operations.”
In a statement from the exchange, it added, “[T]here has been uncertainty about the company’s ability to continue operations, as the company’s liquidity is detained by the credit card issuer concerned. If the funds are not released, the company will not be able to continue its operations.”
The exchange is confident that the issue will be resolved and that it will be able to continue operating. The company’s CEO, Fredrik Grothe-Eberhardt, told the Danish news outlet Finans, “We hope to buy back the website and reopen the business within three or four months.”
The Danish cryptocurrency market isn’t the largest, but it is solid. This is despite attempts by the country’s banks to prohibit digital currencies. The largest bank in the country, Danske Bank, has recommended against crypto and even banned cryptocurrency investments this past April. It said that cryptocurrency can’t offer the same protection offered by traditional currencies or investments, adding that there is a great lack of transparency regarding cryptocurrencies’ underlying value and that the crypto ecosystem was nothing more than a vehicle for financial crime and money laundering.
The bank’s position would be comical if it weren’t so depressing. Just a few days ago, reports surfaced following an undercover operation that banks throughout Europe – including in Denmark – had helped users steal over $60 billion. Additionally, Danske Bank is the subject of an investigation by the U.S. government over claims that it allowed over $235 billion to be illegally funneled through a branch in Estonia.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
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The lawyer appointed to oversee the Mt. Gox refunds, Nobuaki Kobayashi, has reportedly liquidated around $230 million worth of Bitcoin BCH and Bitcoin Core (BTC) in the past four months. Kobayashi made the revelation in a statement (in pdf) yesterday, adding that he will soon provide additional information to creditors on the next steps needed to recuperate their investments stemming from the 2014 hack.
Kobayashi has made several large sell-offs since he was selected to be the Mt. Gox trustee last year. In the latest, and final, round, he indicated that he had sold a total of 25,331 Bitcoin BCH and 24,658 BTC. He added that the sell-offs took place “during the period from the 10th creditors’ meeting in the Bankruptcy Proceedings to the commencement of Civil Rehabilitation Proceedings.” That meeting took place on March 7.
In explaining the sale, Kobayashi said in his announcement, “Due to the Sale, the bankruptcy trustee has already secured a suitable amount of money to secure the interests that are expected to have obtained by BTC creditors under the Bankruptcy Proceedings in connection with BTC claims to be treated as non-monetary claims under the Civil Rehabilitation Proceedings. Accordingly, the bankruptcy trustee has determined that the interests expected to have already been obtained in the Bankruptcy Proceedings can be secured without taking the profit-securing measures under the Trust Agreement and Guarantee Entrustment and Guarantee Agreement for the BTC claims, and the BTC claims are not included in the subject protected claims under the Trust Agreement and the Guarantee Entrustment and Guarantee Agreement.”
This past June, a Japanese court signed off on a petition that would ultimately allow the exchange to begin civil rehabilitation. The approval of that petition paved the way for creditors to be repaid in cryptocurrency, instead of fiat, effectively ending the massive sell-offs. This was seen as good news by the crypto industry, as the sell-offs could have a potentially negative impact on the value of the digital assets.
According to the figures, a single BTC would have been worth around $8111 and Bitcoin BCH, $1195, based on the average price over the four-month period.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
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