Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFirm Insights
Bitcoin Company Files For Bankruptcy Protection
Author: Joel R. Glucksman
Date: November 15, 2013
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Only three months after its inception, Alydian Inc., a provider of Bitcoin mining solutions, has filed for protection under Chapter 11 of the bankruptcy law.
The company – which is a unit of Bitcoin start-up and promoter CoinLab, Inc. – filed bankruptcy proceedings in the U.S. Bankruptcy Court in Seattle. It listed less than $50,000 in assets. Alydian owes a staggering $3 million to New Zealand’s XRay Holdings LLC, $600,000 to CoinLab, and $40,000 to Bitcoin Foundation chairman and CoinLab owner Peter Vessenes, according to The Wall Street Journal.
Alydian is CoinLab’s first incubator company that enables customers to mine Bitcoins without having to operate their own mining equipment. When CoinLab unveiled the unit in August, it said that the company would help to revolutionize the industry and enable “non-technical” consumers interested in the currency to mine with ease and efficiency.
“Alydian has developed an enterprise-scale Bitcoin mining system over the past year and we are excited to announce our capabilities today,” said Alydian CEO Hans Olsen. “The system, based on our first generation 65 nm custom ASIC technology will enable non-technical customers to participate in terahash and petahash-scale Bitcoin mining without worry or technical expertise. Alydian will begin at-scale operation and hosting in late August.”
Both Alydian and Mr. Vessenes, who signed the bankruptcy petition, declined to comment on the proceedings or provide details on how the company plans to repay its debt.
The virtual currency Bitcoins has gained popularity in recent months, but has raised a number of questions about how the currency – which has no ties to government, financial institutions, or investment houses – should be treated for tax purposes. Because Bitcoins are not recognized as a legitimate currency by any governing body, but are increasingly being used for real transactions, federal authorities are scrutinizing the virtual currency more closely.
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