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10 Bitcoin Startups That Didn’t Make It To 2016
This year, the cryptocurrency ecosystem saw lots of ups and downs. While bitcoin came under fire for its alleged use by the terrorist group ISIS, several bitcoin-based start-ups closed their doors. Some cited insufficient resources to run the company as the reason for closure, while others quit due to digital currency regulations, declining interest in digital currencies, and other reasons.
Here’s a list of companies that failed to make it through 2015:
1. Mining ASIC Technologies
CoinDesk reported that Mining ASICs Technologies (MAT) was declared bankrupt by a Maastricht, Netherlands, judge towards the end of 2014, after company CEO Marc Coumans filed for bankruptcy. It followed a business model that required people to pay 35% for its SHA-256 miners but when they failed to appear for most customers in September 2014, people started associating the company with the word 'scam'.
Following a lawsuit launched by C7 Data Centers, a data center collocation services provider based in Utah, CoinTerra filed for bankruptcy in January, according to CoinDesk. According to court documents, it had between $10m and $50m in assets, with liabilities within the same range. The firm filed for bankruptcy protection, meaning it is likely to liquidate all assets in order to repay secured creditors.
Within a year of raising $850,000 from investors including Blockchain Capital, AngelList and Quest Venture Partners, New York-based Bonafide decided to cease operations and start liquidation. The Bitcoin reputation startup, founded in 2013, offered an API that provided reputation data to bitcoin companies offering exchange, wallet and other services.
Citing competition and workload issues, Bitcoin buying service Brawker announced that it will shut down its operations at the end of April, CoinDesk reported. Launched in April last year, it allowed consumers to purchase products with bitcoin.
Buttercoin, a US-based bitcoin marketplace, ceased its operations in April. Launched in 2013, the company cited dip in bitcoin interest among Silicon Valley investors as the reason behind its closure and said that it was 100% secure and solvent, as reported by CoinDesk.
6. BTC Guild
Bitcoin mining pool BTC Guild halted its operations at the end of June, as reported by CoinDesk. According to the company, the finalization of New York State's BitLicense was a primary reason behind its decision and it said that the pool could not afford any legal threats that may crop up as a result of the New York regulatory framework.
Harborly, a Texas-based bitcoin exchange, closed its doors in August citing insufficient resources to run both the firm and a separate project that co-founder and CEO Connor Black described as "a growth hacking tool and service", CoinDesk reported. Regulation of digital currencies was also cited as one of the factors.
The bitcoin remittance startup announced the closure of its SMS-based wallet in August and its subsequent closure. Users have to withdraw their funds by 30th December according to its website. The company said that despite best of intentions, it was unable to deliver a quality product that showed product-market fit. Moreover, it also found the SMS delivery between different carriers in countries outside the US unreliable.
Following an internal dispute and financial issues, Swarm shut down in September, according to CoinTelegraph. Co-founder and CEO Joel Dietz cited three reasons for the closure in blog post on Medium (now removed): the co-founder and designer quit during the product delivery cycle, the team disagreed to open source its software and a loss of $200,000 in a deal with Techstars (mentorship-driven startup accelerator).
10. GAW Miners
The Securities and Exchange Commission (SEC) charged GAW Miners and ZenMiner, and their founder Homero Joshua Garza for operating a Ponzi scheme. The SEC alleges that Garza perpetrated the fraud through his companies by claiming to offer shares of a digital Bitcoin mining operation. However, the companies did not own enough computing power for the mining it promised to conduct, so most investors paid for a share of computing power that never existed.