Blockchain Startup Lygon Goes Bankrupt
Australia-based blockchain startup Lygon, backed by International Business Machines (IBM) and major financial institutions, has filed for bankruptcy. The company’s debt stands at approximately $14.3 million, according to news platform news.com.au. Lygon entered liquidation just five years after its launch, as stated in a statutory report filed with the corporate regulator in late 2023. The firm, headquartered in Sydney with subsidiaries in New Zealand and Singapore, aimed to revolutionize the digitization of bank guarantees through blockchain technology. Lygon’s success story turned sour when it appointed administrators in June 2023 and subsequently liquidated a few months later.
Lygon’s Intellectual Property Sold
In October 2023, Lygon’s intellectual property (IP) was sold to a consortium involving an investment fund and former senior executives. The technology, initially valued at $5.1 million, was sold for $500,000, representing one-tenth of its original valuation. The assets were repurchased by some of Lygon’s previous leadership team. As part of the sale, Lygon had to change its business name to its Australian Business Number. Shareholders expressed disappointment and surprise at the low sale price and questioned the legal aspects of the situation.
Crypto Chaos
The bankruptcy and collapse of blockchain companies have been recurring issues in the cryptocurrency industry. Celsius Network, a cryptocurrency lending platform that positioned itself as a safer alternative to banks, faced challenges including a liquidity crisis and allegations of market manipulation by its co-founder. After a lengthy bankruptcy process, Celsius Network ended its case by creating a new company called NewCo, which will repay customers and creditors using funds from a mining firm and financial backing from an investment group.
Hot Take: Challenges Faced by Blockchain Startups
Blockchain startups, like Lygon and Celsius Network, face significant challenges in the cryptocurrency industry. Despite promising innovations and financial backing from prominent institutions, these companies can struggle with debt, liquidation, and legal issues. The volatile nature of the crypto market and the regulatory uncertainties surrounding blockchain technology contribute to these challenges. Investors and creditors should be cautious when engaging with blockchain startups, as their financial stability may be precarious. While bankruptcy cases like Celsius Network’s may result in the creation of new companies to repay stakeholders, the losses incurred by shareholders and the dilution of investments can have lasting consequences.
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