Key takeaways:
- Everledger was inwardly placed into insolvency after failing to get its intended funding round from an unnamed investor.
- Everledger also received $3.5 million from the United Kingdom Government’s Future Fund in 2021, according to the AFR.
In a surprising turn of events, Everledger, a blockchain startup backed by Tencent, has reportedly filed for insolvency. The company, once hailed as a pioneer in using blockchain technology for tracking and verifying valuable assets, has faced significant financial challenges that ultimately led to its downfall.
Everledger was then discreetly positioned into voluntary administration because it was unable to repay its debts. On March 31, all Everledger staff were given layoff notices, and Vincent’s Chartered Accountants were appointed as administrators on April 24. The first creditors’ meeting was set for May 8.
Despite its early triumphs, Everledger has suffered severe financial difficulties in recent years. The COVID-19 pandemic affected global supply chains and damaged sectors served by Everledger, resulting in lower demand for its services. Furthermore, rising competition in the blockchain field put a strain on Everledger’s revenue streams. These concerns, together with rising operational costs, eventually contributed to the company’s collapse, which shocked and devastated many stakeholders.
According to Everledger creator Leanne Kemp, the leadership of the business was forced to make this decision in order to preserve shareholders’ interests. Everledger found it difficult to balance the costs of technology development, operating costs, and commercial expansion, which ultimately tipped the balances in favour of insolvency.
“The second tranche of funding due to Everledger did not materialise, and we understand that there are external reasons and pressures on this investor, which has placed Everledger in a difficult and unexpected position,” Kemp explained.
“Unquestionably, under a regulated expansion strategy, our usage of cash and operational footprint was completely in line with the board’s direction. This is not a business that overgrew or that received venture funding and lost everything in a matter of months.”
Everledger now joins the list of defunct blockchain and cryptocurrency businesses that perished in the bear storm. The following business entities have also declared bankruptcy: FTX, BlockFi, Voyager, and Celsius Network.
The bankruptcy of Everledger sheds light on the challenges and dangers present in the blockchain sector. Although blockchain technology has enormous potential, it is not invulnerable to market forces, recessions, or severe competition.
