Cash Cloud, the operator of Coin Cloud digital currency automatic teller machines in the United States and Brazil, has filed for Chapter 11 bankruptcy in U.S. Bankruptcy Court for the District of Nevada.
“We are announcing today that our company has filed for Chapter 11 reorganization,” Coin Cloud founder, CEO and president Chris McAlary said in a statement provided to Cointelegraph on Feb. 8. “This decision will allow us to rework our debt, protect the interests of our creditors, and emerge as a stronger, more financially stable company.”
McAlary said that Coin Cloud “remained operational for our go-forward hosts and customers," had the support of its largest creditors, and was still “optimistic about the future of the cryptocurrency industry and our role in building it.”
According to Feb. 7 filing, the company has liabilities between $100 million and $500 million, with between 5,001 and 10,000 creditors and assets between $50 million and $100 million.
Cash Cloud’s biggest creditor is Genesis Global Capital, a subsidiary business of Digital Currency Group’s bankrupt lending arm. It has an unsecured claim of over $108 million from Genesis, far outstripping the next largest claimant, which is owed over $8 million.
Citing unnamed sources, Bloomberg reported on Nov. 22 that Coin Cloud had received an unsecured loan of around $100 million from Genesis and was at that time in talks with it seeking “additional capital” to help it restructure a debt of about $125 million. Genesis was already under financial pressure, and it is not clear that Coin Cloud received additional credit from it at that time.
Related: US city sets up Bitcoin ATM in airport after crypto payment adoption
Coin Cloud was a pioneer in its field, having been active since at least 2014. Coin Cloud stated in a blog post in January 2022 that it had over 1,100 ATMs at the time and said it was “at a pivotal time in the company’s hyper-growth.” The cryptocurrency ATM industry experienced a sharp downturn in the second half of 2022. In addition, cryptocurrency has been incorporated into existing ATMs in places, competing with purpose-built crypto ATMs.
For a limited time only use promo code 15GIFTEEN to enjoy 15% OFF at a Coin Cloud Bitcoin ATM location.— Coin Cloud (@CoinCloudDCM) December 1, 2022
Check out the thread to see how you can redeem your offer! pic.twitter.com/OsEAQCrjEB
Coin Cloud claims on its website that it has more than 5,000 ATMs that handle over 40 cryptocurrencies. Coin Cloud was ranked second worldwide by number of ATMs when it had 4,826 machines, nearly all of which were located in the United States.
In his statement, McAlary said that the team had “made drastic cost cuts to respond to market challenges in order to maintain the company’s profitability.”
Its related entities, including those in Brazil, are not undergoing corporate restructuring and are operating as normal, he added.
Updated at 10:02 UTC on Feb. 8.
A representative of Genesis reached out to Cointelegraph with the information that Genesis Global Capital is the true largest creditor of Coin Cloud, contrary to the information in the Coin Cloud filing, which indicated Genesis Global Trus. The accurate information is reflected in this docket.
Updated again at 2:34 am UTC on Feb. 9 with the statement from Coin Cloud’s Chris McAlary.