UPDATE December 10 10:17 GMT: According to an update in the Ars Technica article, the Guido Ochoa discussed is not the Venezuelan politician, but a different Guido Ochoa in the plastics industry. Our article has been amended accordingly.
The company reportedly owes $40 million to creditors, with CEO Eduardo deCastro saying that the company is “as poor as church mice….cash poor and inventory rich.”
Ochoa runs a plastics recycling business. Noteworthy is that Ochoa was HashFast’s second biggest customer, having previously spent $800,000 with the company.
Boosting Profits in Low FX VolatilityGo to article >>
In a bizarre twist, Ochoa’s purchase is dependent upon allowing HashFast to buy mining boards built by Ochoa with the company’s inventory, at cost. The company would then sell the hardware for a profit to the market at attractive prices. Similarly, Ochoa would sell to the company “a future, fully integrated mining board that is scheduled to be developed early next year.”
The judge presiding over the case expressed bewilderment at the arrangement, comparing it to “a patient that is going to die from three different things” and then adding a fourth surgery. The last thing the company should be doing is spending more money on mining equipment, although in theory, the plan allows it to generate some cash for creditors. He continued:
“The observation that I’ve had since Day 1: I’ve expressed the unusualness of this new business called Bitcoin coming into our old familiar bankruptcy world, and I find it beyond belief that someone who understands Bitcoin wouldn’t have the slightest interest under the bankruptcy code. I’m going to defer to the judgement of the committee and the judgement of the debtor.”
He was also puzzled why the company didn’t convert the bankruptcy from Chapter 11 to Chapter 7.
Prior to this arrangement, creditors and the company had agreed to auction off the company’s assets this past Friday, but it was cancelled because all bids were considered “lowball.” Simon Barber, a co-founder and chief technology officer, was the sole bidder to buy the company’s remaining debt. He offered $20,000 cash and up to 60 hours of consulting services.
The exact cause of the company’s downfall, characterized by delayed/unfulfilled pre-orders and refunds, remains unclear. The company has previously indicated that it is a victim of a string of mishaps and unreliable partners.