2013-11-04 WSJ: Bitcoin Firm Files for Bankruptcy [Alydian]

[n8rwJeTt8TrrLKPa55eU]

http://online.wsj.com/news/articles/SB10001424052702303936904579178362553003276

By Robin Sidel and Katy Stech
Nov. 4, 2013 7:04 p.m. ET

A three-month-old company with ties to one of the biggest promoters of the virtual currency bitcoin has filed for bankruptcy protection with less than $50,000 in assets.

Alydian Inc., a unit of CoinLab Inc., on Friday filed for Chapter 11 protection in U.S. bankruptcy court in Seattle. The 10-page court filing didn't disclose why Alydian filed for bankruptcy or how it hopes to repay its debts.

CoinLab is a bitcoin start-up run by Peter Vessenes, who is also chairman of the Bitcoin Foundation. The foundation is essentially a nonprofit trade group that has gained attention in recent months for promoting bitcoin and supporting new rules aimed at making it more accepted.

CoinLab is one of the best-known names in the fledgling virtual-currency industry, describing itself as a "bitcoin business incubator." It has won credibility because it has attracted funding from venture capitalists such as Silicon Valley's Draper Associates, which pumped $500,000 into the company last year.

Mr. Vessenes, who signed the bankruptcy petition, couldn't be reached for comment. Alydian's bankruptcy attorney also couldn't be reached. A spokeswoman for the Bitcoin Foundation declined to comment.

CoinLab announced the formation of Alydian in August, touting it as "its newest portfolio company" that would develop bitcoin-mining solutions for customers. "Mining" is the term used to describe the computer-generated creation of the virtual currency. The filing doesn't include Coinlab.

Unlike dollars or euros that are backed by a central bank, bitcoin users trade the currency on a number of exchanges or swap it privately. Some merchants also accept bitcoin as payment for goods and services.

Bitcoin trading has been on a rollercoaster this year. The currency nearly quintupled earlier this year, leaping from roughly $50 in mid-March to $230 in April. It traded at about $100 in August, but was fetching $237.50 in Monday trading on the Tokyo-based Mt.Gox exchange.

Federal and state regulators have been cracking down on bitcoin transactions and pushing companies to follow comprehensive anti-money-laundering requirements just like traditional money-transmission businesses such as Western Union Co.

CoinLab, which is based in Bainbridge Island, Wash., has registered as a money-services business with the Financial Crimes Enforcement Network, a unit of the Treasury Department.

Alydian said in court papers that it owes $600,000 to CoinLab Inc. It also listed $3 million in debt to New Zealand's XRay Holdings LLC and $40,000 in debt to Mr. Vessenes.

The filing was made in the name of Alydian affiliate CLI Holdings Inc.

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[aynstein]

The sky is falling, ruuuun. Oh wait nope. Were good. False alarm. Carry on people

[Phinnaeus Gage]

I wonder if the Jacobson Brothers backing HashTrade who pre-ordered Monarchs with a $1M down payment read the news.

I love this comment:

Jean-Claude Morin Wrote:
 
Let me resume.
- The guy start a company (CoinLab) get tons of investor money.
- Strike a deal with Mt. Gox but failed to complete it's part of the bargain so that crashed.
- Change idea and decide to sell mining hardware. Create a new company.
- Get again tons of money from investor.
- Cannot compete with the over saturated market of bitcoin mining hardware.
- Declare bankruptcy
- The company own money to (himself, first company and some guy in NZ (probably the company who was building the hardware).

Investor are dump to trust this guy and they should lose their money and not invest again in this guy.

Almost akin to Jean-Marc Jacobson donating a building in Montreal to himself to house the Bitcoin Embassy.

The Montreal Bitcoin Embassy was first announced on bitcointalk.org around the middle of June and they successfully secured a building in a beautiful section of Montreal and held a meetup 2 weeks ago.

[kjlimo]

I might just be way out of the loop, but this is the first I've heard of Alydian.

Also, I never seem to hear anything about CoinLab other that its deal with Mtgox.

Why don't these companies do something on their own rather than tearing up other businesses?

[balanghai]

What is this a bitcoin run?

[kjlimo]

What is this a bitcoin run?

If you tell me what a bitcoin run is, I'll try to answer whether this is it.

[n8rwJeTt8TrrLKPa55eU]

I wonder if the Jacobson Brothers backing HashTrade who pre-ordered Monarchs with a $1M down payment read the news.

I love this comment:

Jean-Claude Morin Wrote:
 
Let me resume.
- The guy start a company (CoinLab) get tons of investor money.
- Strike a deal with Mt. Gox but failed to complete it's part of the bargain so that crashed.
- Change idea and decide to sell mining hardware. Create a new company.
- Get again tons of money from investor.
- Cannot compete with the over saturated market of bitcoin mining hardware.
- Declare bankruptcy
- The company own money to (himself, first company and some guy in NZ (probably the company who was building the hardware).

Investor are dump to trust this guy and they should lose their money and not invest again in this guy.

Almost akin to Jean-Marc Jacobson donating a building in Montreal to himself to house the Bitcoin Embassy.

The Montreal Bitcoin Embassy was first announced on bitcointalk.org around the middle of June and they successfully secured a building in a beautiful section of Montreal and held a meetup 2 weeks ago.

Fortunately, Bitcoin will survive Vessenes, just like it has survived Wagner and all the other hucksters.

But undoubtedly, he is a strong contender for largest and fastest destroyer of capital in Bitcoin's short history.  

A communications pattern is discernible for anyone caring to look.  As little as 3 days ago:

We've been mining for a while at BTC Guild, but thought it was time to come out of the closet.

Or the post just before that one, from March:

The deal's not in trouble.

We've moved a few key customers over, will announce more information soon.

Denial, diversion, stalling...anything but the truth or an accurate picture of reality.  Lest we forget, this is the chairman of the Bitcoin Foundation.  I'm not a member and don't have access to their forum.  Are people over thee happy at being represented and associated with this person?  Is anyone pressuring for his resignation?

[vokain]

too bad, they should've just bought BTC 

[BlackBison]

Bad news for mtgox too, as Coinlab owes gox ~$5M from their failed partnership

[Bitware]

So, to summarize we got a guy who cant run a business without filing for bankruptcy running The Bitcoin Foundation.

[cedivad]

So, to summarize we got a guy who cant run a business without filing for bankruptcy running The Bitcoin Foundation.

And he is now hidden at the bottom of the foundation board page. At least that.

[Bitware]

So, to summarize we got a guy who cant run a business without filing for bankruptcy running The Bitcoin Foundation.

And he is now hidden at the bottom of the foundation board page. At least that.

I never knew that pretending something does not exists was a good thing.

[cedivad]

So, to summarize we got a guy who cant run a business without filing for bankruptcy running The Bitcoin Foundation.

And he is now hidden at the bottom of the foundation board page. At least that.

I never knew that pretending something does not exists was a good thing.

It's not pretending its non existence, it's being ashamed from it. My toughs, eh.

[Phinnaeus Gage]

I might just be way out of the loop, but this is the first I've heard of Alydian.

Also, I never seem to hear anything about CoinLab other that its deal with Mtgox.

Why don't these companies do something on their own rather than tearing up other businesses?

Speaking of being out of the loop, the Jacobson Brothers backed HashTrade and CoinWare, and nobody seems to know anything about CoinWare, with even HashTrade coming onto the scene only recently. More on them later.

~TMIBTCITW