The US-based crypto mining hosting service provider has filed for bankruptcy and faces eviction in Washington County.
Giga Watt Files for Chapter 11
Cryptocurrency prices since touching an all-time high earlier in January have dropped by over 80%. The financial impact on companies involved in the crypto-mining industry has started showing up.
Giga Watt, a cryptocurrency mining and equipment hosting service provider based in Wenatchee, WA, filed for bankruptcy earlier Monday. The company filed chapter 11 documents in Washington’s Eastern District federal court, claiming less than $50,000 in assets and creditors owed nearly $70 million.
The Signs Were There
Even months before the bankruptcy filing, the writing was on the wall. Back in August, Founder and CEO Dave Carlson left the company – although he stayed on as head of Giga Watt’s board of directors – and George Turner was named managing director. Just a month later, the company laid off nearly 75% of its staff.
Despite these signs, along with mounting debt and a crashing crypto market, the bankruptcy filing caught many at the company by surprise. Turner, who oversaw mining projects in East Wenatchee and Moses Lake, claimed that the filing was made by the board of directors and did not pass through his office:
I was advocating Chapter 11 many months ago, and this news came as a surprise to me this morning.
The court documents were signed by the firm’s board secretary and chief coordinator Andrey Kuzenny.
In addition to the bankruptcy and forced downsizing, Giga Watt also faces eviction in Douglas County with the process being initiated by the Port of Douglas County.
Embroiled in Lawsuits
In 2017, Giga Watt launched an Initial Coin Offering (ICO) during which they were able to raise $22.3 million. The funds were supposed to be used for the construction of 22 pods of high-capacity processing equipment and a private electrical substation.
However, it is reported that the project missed deadlines and the ICO customers were not able to start cryptocurrency mining as per timelines committed to by Giga Watt.
ICO customers have launched two class action lawsuits against the firm. The first alleges that the firm ignored securities laws and failed to take regulatory approvals. The second lawsuit, filed in October, accuses the company of racketeering and wire fraud for committing to deliver mining equipment which it failed to provide.
As the hype around cryptocurrency investments wears thin and reality is setting in, millions of dollars pumped into cryptocurrency firms through the ICO route are getting wiped out.
Does the bankruptcy filing spell the end for Giga Watt or can they somehow rebound? Let us know in the comments below.
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