A $252 Million Hole

Bitwise Industries and its affiliated entities filed for Chapter 7 bankruptcy in Delaware at the end of June 2023, listing $252.03 million in debt. Jeoffrey L. Burtch was appointed trustee, and mediation toward a “global settlement” began in January 2024.

The $20 Million Settlement

The bankruptcy court approved a $20 million global settlement framework on July 30, 2024, with final approval on November 20, 2024. About $6 million was earmarked for the WARN Act class action brought on behalf of the laid-off workforce, and the deal was funded largely by roughly $11.5 million in insurance money, including a $5 million Scottsdale Insurance policy. Board members including Mitchell Kapor, Paula Pretlow, Ollen Douglass, and Joseph Proietti were among those named and released by the deal.

What Employees Actually Got

The first settlement checks went out on May 30, 2025. Most former employees netted $2,466.13 after taxes, on gross awards of a bit over $4,000 — a long way from early estimates that individual recoveries could reach $15,000. A second distribution is expected once the Chapter 7 case wraps up; the class-action firm’s March 2026 update points to sometime in 2027, though earlier reports had suggested 2026. Investor and lender recoveries from the estate remain unreported.

The Side Deals and Side Suits

Former Bitwise president Bethany Mily settled with the trustee without paying anything directly, agreeing instead to assist “the investigation and pursuit of potential claims against other former officers and directors.” The trustee also asserted that a loan repayment made to a trust associated with board member Mitchell Kapor about two months before the bankruptcy was a preferential insider transfer. Former directors Proietti and Douglass separately sued Soberal, Olguin, and Mily in Fresno County Superior Court, alleging losses “likely to total in the hundreds of millions.” On the regulatory side, the SEC’s parallel fraud case ended with judgments entered January 31, 2024, including officer-and-director and securities-industry bars.

Sources

The Business Journal: Chapter 7 filing • SJV Sun: settlement approval • YourCentralValley: first checks • WARN class action updates • SEC litigation release