One of the largest Bitcoin ATM operators in the US and Brazil, Coin Cloud, submitted for Chapter 11 Bankruptcy on January 8, after the firm received a heavy blow from the future of crypto and the implosion of FTX, which was left with millions of dollars in debt.
Coin Cloud owes money to about 10,000 creditors but has between $50 million and $100 million in assets, far from its debts. This imbalance in assets and liabilities causes the company to take the option of bankruptcy. At press time, Coin Cloud has nearly $500 million in debt, with the main cause being FTX exposure through Genesis Global Trading.
The Genesis of Coin Cloud Ordeal
The company is doing well as one of the largest operators of digital currency machines in the US, with more than 1100 Bitcoin ATMs worldwide. When the crypto business started to boom, the company intended to expand operations to top US retailers. This was during the COVID pandemic when demand for Bitcoin ATMs increased beyond Coin Cloud’s expectations.
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Coin Cloud’s Statistics indicates that it operates over 5,000 automatic teller machines in the US and Brazil. The ATM supports more than 40 cryptocurrencies, such as Bitcoin, Litecoin, Dogecoin, Bitcoin Cash, Ethereum, and more.
However, during the bear cycle of 2022, the crypto market experienced a severe downturn that caused the price of crypto assets, including Bitcoin, to fall. As a result, Bitcoin lost more than 70% value and decrease from a 2021 high of $69,000. That’s when Coin Cloud’s business began to suffer, as people spent less Bitcoin during bear markets.
The financial struggle escalated when the FTX exchange exploded and sent contagion ripples through the crypto industry. The main creditor, Genesis Global, was hit hard by FTX and its sister company Alameda. The situation surrounding FTX and the bankruptcy of Genesis, coupled with the low revenue results during the crypto crash, left the company with no choice but to give up.
At bankruptcy filing, Coin Cloud listed its obligations, highlighting Genesis Global Trading, a subsidiary of Digital Currency Group, as the largest creditor with more than $100 million in debt. Cole Kepro is the second largest creditor, with about $8.5 million in debt.
Outlook For Global Growth Of Crypto ATMs
Regardless of the severe crash in crypto markets and companies, the global digital asset industry has grown significantly from its size around 2018 and 2019. Using the cryptocurrency ATM industry as a case study, the sector has experienced tremendous growth despite the problems of crypto services. provider.
according to for data from CoinATMRadar, 33,281 ATMs in the United States make up 86.8% of all Bitcoin ATMs worldwide. Canada follows closely behind the US, with 2,554 ATMs, representing 6.7% of the total worldwide ATMs.
Bitcoin ATMs remain a major contributor to the growth of the crypto ecosystem. Although some crypto ATMs are compared to Fiat ATMs, Statistics show that crypto ATMs have high growth potential in the coming years as cryptocurrencies gain mainstream adoption. Therefore, the demand for Bitcoin ATMs is not faint relative to the challenges facing the crypto industry.
Apart from Coin Cloud, no other crypto ATM company has reported financial problems. However, crypto ATM provider BitStop has get Genesis Coin as it expands its reach, operating over 31.9% of global ATMs.
Featured image from Pixabay, chart from TradingView.com