Digital Transactions Authoritative, insightful and timely information for payments professionals
Bitcoin Depot, the 10-year-old operator of a network of some 9,000 machines that let users convert cash into bitcoin, announced early Monday it is closing down that network with a voluntary Chapter 11 filing in the U.S. Bankruptcy Court for the Southern District of Texas.
The move comes on the heels of a shakeup in the company’s top ranks and just two months after the Atlanta-based company hired former MoneyGram chief executive Alex Holmes as CEO. Holmes succeeded Scott Buchanan, who had taken the reins from founder Brandon Mintz only in January. Buchanan at the time cited a “new opportunity outside of the company” as the reason for his move, according to a news release issued by Bitcoin Depot at the time.
The filing also comes as the company said it could no longer sustain operations in the face of costs brought on by state regulations and litigation. It reported a 49% plunge in revenue in the March quarter year-over-year, leading to a $9.5-million net loss. It had reported $12.2 million in net income a year ago. Meanwhile, its stock plunged nearly 80% in the months leading up to the Chapter 11 filing.
Other complications included a move by the state of Connecticut to suspend Bitcoin Depot’s money-transmission license, followed by the company’s announcement in a March filing with the Securities & Exchange Commission that hackers had swiped $3.7 million from its cryptocurrency wallets. Pressure also mounted as states began reconsidering Bitcoin ATMs. Tennessee and Indiana have both banned the machines.
The company in recent years has acted to widen its field of operations. It acquired Kutt, a peer-to-peer social-betting platform, in March last year in a diversification move. Terms of the deal were not disclosed.
Bitcoin Depot has also acted to expand the methods by which users can use cash to acquire bitcoin. One example is BDCheckout, which in certain states allows users with the BDCheckout mobile app to buy the digital currency at designated retail checkouts.
