Bitwise Industries’ board of directors fired its two co-founders, Jake Soberal and Irma Olguin Jr., on Friday – less than one week after they initiated a mass furlough of the company’s workforce and amid growing questions of the conduct that led to financial collapse.
Driving the news: An email sent to the entire company by Bitwise board member Ollen Douglass announced the pair were terminated by the Board. Douglas will take over as interim President of the struggling corporation.
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- Soberal and Olguin founded the firm in 2013 and led its growth through an evangelical approach to building a tech ecosystem in downtrodden communities to build its business.
- Amid Monday’s mass layoff, internal documents have shed light on how the company was operated, and the potentially criminal approach Soberal and Olguin took to raise capital before opting to shutter operations.
- The Sun reported on Thursday that Soberal, in seeking to raise capital, deliberately misled lenders about the status of shares being put up as collateral, asserting that they were unencumbered when they had already been spoken for by previous lenders.
- Douglass is the CEO of Hanover Street Advisors, a consulting firm focused on supporting early stage venture-backed companies. Prior to that, he launched and led Motley Fool Ventures, which is an investor in Bitwise. Douglass has more than 30 years of experience in finance, including as an auditor at big four accounting firm KPMG
What they’re saying: Douglass said that he and the rest of the Bitwise board were caught off-guard by the pathway to collapse.
- “Unfortunately, the non-management board and I, like many of you, are finding out that the picture the company consistently communicated orally and in presentations, was not an accurate picture of the company’s financial health,” he said in a company-wide email.
- “[The] Board is engaging experts to help us understand the full extent of what led to these current circumstances and events,” Douglass wrote. “We are committed out how this happened and taking appropriate actions.”
- In a press statement, Douglass reiterated that the Board’s discovery of its financial collapse was recent.
- “It was an incredibly difficult decision to suspend operations at Bitwise Industries and furlough the hardworking team members. The Board of Directors was recently made aware of the company’s cash deficit by management and took immediate action as a result,” said Douglass. “The Board of Directors is taking this matter very seriously. We are committed to determining the root cause and will continue to take swift action.”
