- Factom Inc., a Texas-based Blockchain Company, filed for chapter 11 of bankruptcy.
- David Jevans, the chairman of Factom Inc. assured investors that the bankruptcy will have no impact on Factom Protocol.
- Repeated and mounting losses since its inception in 2014 led to such a harsh decision by the management.
Factom Inc., a Texas-based Blockchain Company, filed for chapter 11 of bankruptcy. It is a reorganization bankruptcy that involves a partnership or corporation. The debtor proposes a plan to repay investors to keep the business alive and running. David Jevans, the chairman of Factom Inc. assured investors that the bankruptcy will have no impact on Factom Protocol, a data provenance built on top of Bitcoin blockchain. Repeated and mounting losses since its inception in 2014 led to such a harsh decision by the management.
Factom Inc Company Been Facing Losses Since 2016
The loss incurred in 2016 was $2.6 million and approximately the firm owes $7.5 million in total to all investors and stakeholders. Employee wages cut by $390,000 between 2018 and 2019 which has had less of an impact on its bankruptcy.
After making the financial statements public, it was evident that the Company was in dire need of an investor who could keep the organization afloat. It was in early March this year that the firm showed signs that a bankruptcy plan was unavoidable.
The company raised $18 million in several funding rounds. The administrators will now evaluate the reorganization plan submitted by the management. So, the key is to repay investors and creditors over time.
In a statement which dates back to 2017 read that over $8 million raised through a Series A funding led by Tim Draper of Draper Associates. The investors assured that the Company would be the ideal platform for blockchain-as-a-service combined with data provenance and integrity solutions. Paul Snow, CEO of Factom Inc, trusted the organization’s aim to solve audit, trust, and honesty-related business problems.
Cryptocurrency and Bankruptcy
History has been ripe with evidence that cryptocurrency and bankruptcy have had a bitter relationship. Further, the court proceedings will decide whether to treat cryptocurrency as a commodity or normal currency.
The later could protect the company if it does possess digital currency. Thus, there have been problems with legal proceedings of a blockchain company due to a lack of legislation about digital currencies and technical limitations. However, changes expected in the field of digital currency insolvency along with its rules and policies.