Giga Watt is the latest company to feel the full effects of uncertainty in the cryptocurrency sector. The Washington-based cryptocurrency miner has filed for bankruptcy protection. Launched last year, the company has had tumultuous run in 2018. Soaring debt levels as well as class action lawsuits have all but made it impossible for the company to continue operating.
Giga Watt Debt Levels
Bankruptcy filing comes on the company’s debt level soaring to between $10 million and $50 million. In contrast, the company’s assets may not be worth more than $50,000. However, the management insists that reorganization under Chapter 11 would go a long way in serving the needs of creditors.
A good chunk of Giga Watt debts are from business it did with its affiliate companies. For instance, it owes Giga Watt PTE its mining equipment supplier $1.37 million. It also owes Cryptonomos, a company that handled its ICO offering $2.3 million.
In addition to the bankruptcy filing, Giga Watt is also facing a string of other issues. For starters, Douglas County has already initiated eviction process as it seeks to kick the company out of the country. In addition, the company is facing a string of class action lawsuits lodged by shareholders.
Class Action Lawsuit
The company carried out an initial coin offering and raised $22.3 million. Funds raised from the ICO were to go towards a build-out that would have resulted in the construction of 22 pods made up of high capacity processing equipment. However, the project missed a key deadline triggering a wave of class action lasers
ICO investors in their class action lawsuits allege that the clammy ignored security laws in its offerings. The investors also accuse the company of engaging in racketeering. Allegations of wire fraud have also erupted as the company stands accused of failing to deliver crypto mining equipment as promised.
Giga Watt joins a string of companies that have felt the full effects of the cryptocurrency sector turning bearish. Companies have had to contend with reduced returns from cryptocurrency mining as cryptocurrencies continue to experience a double-digit drop in value. Bitcoin is already down by more than 70% for the year.