Coin Cloud had been seeking additional financial support from Genesis Global Trading even though the latter was struggling to pay its creditors.
Coin Cloud Inc, a company that has over 5000 automatic teller machines (ATMs) in the United States and Brazil, has filed for chapter 11 bankruptcy protection in the district of Nevada. According to the court filings, Coin Cloud owes its creditors between $100 million and $500 million, with between 5,001 and 10,000 creditors and assets between $50 million and $100 million. The largest Coin Cloud creditor is DCG’s Genesis Global Trading with an unsecured claim of over $108 million.
Notably, Genesis Global Trading recently filed for chapter 11 bankruptcy protection after succumbing to FTX and Voyager Digital’s bad debts last year. Forward, the company anticipates reorganizing its operations under judicial management for the best interest of creditors and shareholders.
“This decision will allow us to rework our debt, protect the interests of our creditors, and emerge as a stronger, more financially stable company,” Coin Cloud founder, CEO, and president Chris McAlary said.
The announcement has come as a shock to many cryptocurrency traders following a relief rally in January. Nonetheless, Circle CEO and Founder Jeremy D. Allaire had predicted that several crypto companies are silently insolvent and warned traders to proceed with caution during this year’s WTO.
— Whale Coin Talk (@WhaleCoinTalk) February 8, 2023
According to a report by Bloomberg, amid its bankruptcy, Coin Cloud had been seeking additional financial support from Genesis Global Trading even though the latter was struggling to pay its creditors.
Coin Cloud Piles Up Crypto Difficulties
The insolvency of Coin Cloud is a clear indication that the crypto market may not be over yet with the 2022 bear market. A possible correction could send Bitcoin and altcoin prices to last year’s lows and perhaps even lower. Furthermore, selling pressure would increase as investors take profits and flee the volatility and uncertainty.
Founded back in 2014, going insolvent after eight years highlights the difficulties that crypto companies are facing to remain floating. Moreover, Coin Cloud experienced a sharp decline in operational growth in the second half of last year following the crypto crash that sent traders aside.
Notably, traditional financial institutions with ATMs well distributed in various locations have entered the crypto market. As a result, purpose-built crypto ATMs have experienced increased competition during their early development stage, thus not being able to meet financial obligations.
Meanwhile, the total crypto market capitalization has declined approximately 3.7 percent in the past 24 hours to about $1.1 trillion, according to the latest data. With Bitcoin price exchanging at around $22.5K today, its market dominance stands at about 39.56 percent.