After filing for Chapter 11 bankruptcy protection, Bitcoin Depot is swapping out all 9,000 kiosks from the North American ATM network it has built up. The company announced it will pursue an orderly wind-down and a sale of its assets through the court-supervised process.
How Bitcoin Depot got to this stage
CEO Alex Holmes explained that despite efforts to strengthen fraud protections (including enhanced identity verification, customer fraud warnings, and lower transaction limits), the regulatory landscape has become untenable. Moreover, states have imposed increasingly stringent compliance obligations, new transaction limits, and in some jurisdictions, outright restrictions or bans on Bitcoin ATM (BTM) operations.
Operators have also faced increasing litigation and regulatory enforcement, which “materially affected Bitcoin Depot’s business and financial position,” Holmes commented, concluding that “the Company’s current business model is unsustainable.”
The company’s network of BTMs has been taken offline effective immediately. Bitcoin Depot has filed customary “first day” motions with the U.S. Bankruptcy Court for the Southern District of Texas.
Availability of assets
In order to sell off the assets that comprise Bitcoin Depot and wind down its operation, the Chapter 11 process will allow the orderly wind down of the Company. All Canadian “entities” are part of the U.S. Chapter 11 process, subsequent to which restructuring proceedings in Canada would create assets available for sale. The Company will also be able to wind down and sell all of its non-U.S. entities under the applicable law in each jurisdiction.
“After evaluating all options, we determined to initiate this court-supervised process to facilitate an orderly wind-down of operations and a sale of the Company’s assets. We are grateful to our customers, suppliers, and business partners for their support. I also want to thank our employees across the globe for their continued hard work and dedication.” – Alex Holmes, CEO of Bitcoin Depot.
Concern in the crypto community
Bitcoin Depot’s demise has caused concern in the crypto community over the loss of the major fiat-to-crypto on-ramp that was available to over a million unbanked and underbanked user who used one of their thousands of kiosk locations to buy Bitcoin. Many of these people feel they have now lost access to this service as a result of Bitcoin Depot’s bankruptcy. This has also raised more questions regarding the overall regulatory pressure on crypto ATM operators. Nevertheless, they are subject to more inspections after being weaponized and used by criminals to conduct scams and more violent threats to citizens using these services.
