Warning signs of Bitwise financial troubles before it furloughed entire workforce

Published: Jun. 1, 2023 at 6:40 PM EDT
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TOLEDO, Ohio (WTVG) - Local officials are shocked by the news that a tech startup furloughed its entire workforce just weeks before it was supposed to open a new campus in Toledo, but those who have watched the company grow over the years say there were warning signs that it was in trouble.

Unwise loans, unexpected losses and unpaid bills all contributed to the downfall of Bitwise Industries. The company was renovating the former Jefferson Center in Toledo that was set to open in the coming weeks.

Local leaders were blindsided when Bitwise furloughed its entire workforce this week.

There were signs that the Fresno-based company was in financial trouble. The mayor of that city says it was just discovered that bitwise hasn’t paid city business taxes in nearly two years. Bitwise owes hundreds of thousands in county property taxes and was late on rent payments.

The company’s co-CEO was reportedly getting rejected by potential investors as he sought another round of funding. He told reporters covering the company that it might be growing too fast -- but that’s the Silicon Valley model.

“They compare it to other tech companies. Amazon was losing money for years. Any of the other big names in tech -- that’s kind of the model,” said Daivd Taub, a reporter covering Bitwise for gvwire.com. “It’s not about how much money you’re making now. It’s the potential to make money you’ll make down the road.”

Bitwise now faces legal trouble in addition to its financial troubles. A $33 million dollar lawsuit filed by its partners says the company misled them and breached contracts. The mayor of Fresno also accuses Bitwise of violating labor laws by not giving a warning that it would furlough employees.