Crypto Miner Giga Watt Files For Bankruptcy
Cryptocurrency mining firm Giga Watt is shutting down its operations. The company has filed for bankruptcy protection under Chapter 11. Court filings indicate that the company is insolvent and incapable of meeting its financial obligations.
Giga Watt Bankruptcy Filing
The company’s liabilities range from between $10 million and $50 million. In contrast, its assets are believed to be not more than $50,000 in value. Giga Watt owes huge chunks of money to its affiliate companies. For instance, it owes Singapore based Cryptonomos $2.3 million. It also owes its mining equipment supplier Giga Watt PTE $1.37 million.
Bankruptcy filing is not the only issue the company will have to contend with. Port Douglas County has already initiated proceedings as it seeks to evict the company from the county.
Bankruptcy filing comes as a surprise given that Giga Watt came into existence last year. CEO and founder Dave Carlson launched the company as a host service of crypto miners. He left the company mid this year as the company as things started to go south. Part of the drive saw the company cut staff from 63 to 16 workers.
Class Action Lawsuits
Giga Watt has not had the best of runs in 2018. The company has had to battle two high profile class action lawsuits. One of the lawsuits allege wire fraud while the other allege impropriety when it comes to the company’s Initial Coin Offerings that raised $22.3 million
Giga Watt carried out an ICO and sold token to raise money for a planned build-out. The cryptocurrency miner sought to construct 22 pods made up of high capacity processing equipment. The company’s woes started on missing crucial deadlines on the construction drive.
The situation became even worse on clients failing to hash cryptocurrency on the promised schedule. Investors have since lodged two class action suits alleging that the company ignored security laws on its ICO. The company also faces charges of racketeering as well as engaging in wire fraud on failing to provide crypto mining equipment as promised
The company was one of the biggest beneficiaries of the crypto boom that saw Bitcoin rally to record highs. Sentiments in 2018 have however turned south, Bitcoin price having imploded plunged by more than 70% the overall industry having turned bearish.
Cryptocurrency mining is no longer as lucrative as it used to be. A number of companies have had to trim their operations, given the reduced returns at the back of high operational costs in the form of high-energy costs.