Would you buy a bankrupt Bitcoin technology startup? Guido Ochoa did


South America has become a veritable development ground for virtual currencies.

Just a year and a half ago, partly as a result of Argentine president Cristina Kirchner’s draconian capital control laws which have outlawed the use of US dollars and partly due to the lack of public confidence in the domestic currency, Argentina’s Bitcoin community has grown exponentially, with values having increased to over 30% more than in neighboring Uruguay in Summer 2013, and many businesses eschewing standard merchant services facilities from credit card firms in favor of Bitcoin.

Now it is Venezuela’s turn.

Guido Ochoa could be considered something of an insightful entrepreneur, and one that is most certainly not fearful of risky enterprise, having recently purchased bankrupt manufacturer of Bitcoin mining technology HashFast.

HashFast, whose Golden Nonce Chip can be distributed to any region internationally, boasting hash rates of over 750 GH/s by using a high performance 28 nm ASIC mining chip went into liquidation in November this year, owing investors approximately $40 million.

Following its insolvency, an onslaught of legal accusations ensued, including breach of contract, fraud and an involuntary bankruptcy petition, culminating in an auction which took place on December 4 this year.

The auction resulted in absolutely no interest whatsoever, and was the final attempt to recover investor funds following a statement by lawyer Ray Gallo who represented investors who stated in an interview with Arstecnica “I think the company is out of money, so I think the final employees resigned. Yes, somebody could buy claims against Barber. I’m not sure those have any value though.”

Venezuelan Mr. Ochoa then came forward to purchase the firm, which attracted the attention of bankruptcy judge Dennis Montali.

Judge Montali explained “What troubled me was to read that Mr. Ochoa will allow the debtor to buy mining boards? This is like a patient that is going to die from three different things and now you’re suggesting a fourth surgery. Now they want to do a hip transplant? Why?”

Mr. Ochoa, who owns a plastics manufacturer in Venezuela called Siosca had one potential rival when it came to offering to buy HashFast’s assets, in the form of Simon Barber, the company’s CEO.

Mr. Barber’s bid consisted of a cash payment of $20,000, payable via $10,000 immediately and followed by $500 per month for 20 months, and “contribution of up to 60 hours of consulting services and a “waiver of all potential claims against the estate, which could exceed $20,000” which served as an attempt by Mr. Barber to buy the company’s debt.

Shortly before the hearing adjourned, Judge Montali expressed his puzzlement in the entire affair and wondered why the company simply didn’t just convert its Chapter 11 bankruptcy protection into a Chapter 7, which allows a company to liquidate under American bankruptcy law.

“I would first like to clarify that I have nothing to do with the Venezuelan government and the Venezuelan government has to do anything in this negotiation, so your questions should eliminate stigma to my country and its government,” Mr. Ochoa said at the outset of the e-mail exchange.

Mr. Ochoa’s father, also named Guido Ochoa, is a member of the Venezuelan Congress and is a member of the National Assembly’s Science and Technology Commission. The elder Ochoa is a member of the United Socialist Party of Venezuela, the party of late Venezuelan President Hugo Chavez.

It is particularly interesting that a communist nation which has absolutely no trade ties with free market economies is able to allow a citizen to take interest in a free market Bitcoin technology firm whose technology generates peer to peer digital currency.

Venezuela has extremely rigid capital control laws, which are even more stringent than those in Argentina, a nation in which the interest in Bitcoin has been so great that if any nation will move to a cashless society and make Bitcoin a mainstream method of payment which usurps sovereign currency, it could well be Argentina.

Bearing this in mind, with modern proxy servers and mobile Bitcoin storage wallets, Venezuela could be well positioned to follow suit.

it is very difficult to move large amounts of money out of the country. Just this month, the city of Caracas allowed the central bank to hold currency reserves for the first time in something other than the country’s currency, the bolivar. The reserves will now be in foreign currency, precious metals, and even diamonds. As such, it’s easy to see how Bitcoin could be attractive in a place like Venezuela: it could be used for international financial transfers.

Mr. Ochoa has, however, expressed to Arstechnica that moving money outside the country is not his intention.

“Personally, I am not working with Bitcoin for the reasons you state in your question,” he wrote. “As I said before, I have been following Bitcoin since 2010, and the unfortunate bankruptcy at HashFast has given me an opportunity to get involved in the design of ASIC chips for mining. The vision we have is to create new chips with greater processing power and a much better processing/consumption ratio. We hope to become world leaders in the design, manufacture and sale of Bitcoin mining systems.”

Interestingly enough, Siosca itself does not even accept Bitcoin. “My business in Venezuela distributes to large companies,” he wrote. “We do not sell in small quantities (retail). I think there are no more than 10 companies or individuals working/accepting bitcoin in Venezuela, it really is an unknown subject.”

 

 

Related News

arrow

Would you buy a bankrupt Bitcoin technology startup? Guido Ochoa did

13

Send this to a friend