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.
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