How Intelligo Saw Trouble Coming For Bitwise — Months Before It Filed For Chapter 7 Bankruptcy

Like so many tech companies, Bitwise Industries had a grand vision: to transform underserved cities with technology-based solutions. The ascendant startup had almost 1,000 employees, a bevy of impressive investors and a valuation north of $200 million. 

Everything looked to be on the up-and-up for Bitwise — until June 2023, when they filed for Chapter 7 Bankruptcy. 

In this article, we’re breaking down what you need to know about a chapter 7 bankruptcy filing, why it’s relevant for future partners to consider when making investment decisions, and how Intelligo could have provided helpful signals even before the troubles became public knowledge.

What is chapter 7 bankruptcy?

Sometimes referred to as a “liquidation bankruptcy,” a chapter 7 bankruptcy is designed to help quickly settle debts. The debtor has to sell any nonexempt possessions and assets in order to pay back creditors who they are indebted to. It’s one of the more straight-forward types of bankruptcies, as it resets your finances by placing a temporary stay on certain debts, liquidating others, and allowing the debtor to keep certain exempt properties (this varies state by state). Chapter 7 bankruptcy allows certain debts to be discharged–that is freeing the debtorup from repaying that amount–but those do not include child support, alimony, and certain other debts.

Why does a bankruptcy matter on a background check?

A bankruptcy or other unmanageable debt can give pause to any potential partner, as it is an indicator of a potential partner’s inability to handle their personal and professional financial responsibilities. Our reports surface both personal and corporate bankruptcies, and together they can serve as a warning that entering into any kind of deal can pose a potential risk. In this specific case, Bitwise was the investment itself –not simply the investment partner–and understanding their financial troubles would have been significant in the event that an investor wanted to take action to secure their investment.

How Intelligo could help

Intelligo’s monitoring systems were able to capture indicators that Bitwise was having financial issues months before it was public knowledge that the company was in trouble.

In April 2023, Intelligo’s Ongoing Monitoring tool flagged a legal alert for Bitwise. The company had sold off its rights to millions of dollars in tax credits for keeping employees on payroll during COVID-19. The legal complaint, filed by 1861 Acquisition LLC, alleged that when the IRS issued Bitwise Industries its refund checks, Bitwise deposited those into its accounts rather than turning over that money to the buyer of the credits, and then failed to make payments. 

Not long after, things took a turn for the worse. The company furloughed, and then laid off its entire 900 person staff, and then it filed for bankruptcy.

By collecting and flagging adverse events and signals across media and legal sources, Intelligo’s systems could detect early on that Bitwise Industries was headed for trouble.

Combining the power of AI with the insight of human experts, Intelligo provides the fastest, most comprehensive individual and company background checks on investment subjects. Monitor your existing investments to get ahead of adverse events: Sign up for a demo today.