Bitcoin Depot Flags Going-Concern Doubt as Litigation Costs Top $20 Million

Doohyun Hwang

Summary

Bitcoin Depot said in a quarterly report filed with the SEC that there is substantial doubt about the company’s ability to continue as a going concern.
The company said it reflected more than $20 million in legal judgments, ongoing litigation, a worsening regulatory environment, an $80.7 million drop in revenue, and a $9.5 million net loss.
Bitcoin Depot’s shares (BTM), which trade on the Nasdaq, fell more than 40%% over the past five trading days, dropping from $5.01 to $2.93, while Canada’s proposal for a blanket ban on crypto ATMs added to the pressure.

Forecast Trend Report by Period

Bitcoin Depot, a cryptocurrency ATM operator, said in a quarterly report filed with the US Securities and Exchange Commission that there is substantial doubt about its ability to continue as a going concern. The company cited ongoing litigation and a worsening regulatory environment as the main reasons. Going concern is an accounting term that assumes a business can meet its financial obligations as they come due.

Cointelegraph reported on May 15 that Chief Financial Officer David Gray said the company’s Form 10-Q reflected more than $20 million in legal judgments and ongoing litigation over the past four quarters. Management concluded those factors raised substantial doubt about Bitcoin Depot’s ability to continue as a going concern. Litigation-related costs included a $1.9 million payment made in January to the Maine Bureau of Consumer Credit Protection. Cases brought by state authorities in Massachusetts and Iowa are also continuing.

Bitcoin Depot said revenue for the three months ended March 31 fell by $80.7 million from a year earlier. Transaction volume declined because of regulatory pressure and tighter compliance controls. The company also posted a net loss of $9.5 million for the period.

Bitcoin Depot appointed Alex Holmes as chief executive officer in March. Shares of the company, which trades on the Nasdaq under the ticker BTM, have fallen more than 40% over the past five trading days, dropping from $5.01 to $2.93. Canada’s government also proposed a blanket ban on crypto ATMs in its spring economic update this year, adding to the pressure. Bitcoin Depot operates about 220 machines in Canada, the report said.