|Headquarters||Virginia Beach, VA|
|Key People||Fred Grede, Chief Executive Officer|
Bcause, LLC is a cryptocurrency startup headquartered in Virginia Beach, Virginia. It offers cryptocurrency "farming" services, acting as a data center for bitcoin and other miners. It has also applied to be a Designated Contract Market (DCM) to trade futures and options on cryptocurrencies. The firm filed for Chapter 11 bankruptcy in April 2019.
Based in Virginia Beach, VA, and Chicago, IL, Bcause was originally planned as a platform to offer bitcoin options as a hedging tool. Later, the founders identified potentially profitable opportunities in providing infrastructure and services for bitcoin mining as well as offering logistical and support services to both retail and institutional bitcoin miners at its data center. By February 2018, Bcause was running thousands of mining rigs for clients in Asia and the U.S. in an old beverage warehouse in Virginia Beach. 
Bcause applied to the Commodity Futures Trading Commission in September 2016 for registration as a designated contract market to trade bitcoin futures. As of May 2018, the application was pending approval. 
Bcause was one of 20 companies chosen to exhibit in the Innovators Pavilion at the 33rd Annual FIA Expo in Chicago in 2017. The Innovators Pavilion showcased startup companies providing forward-thinking solutions for the futures, options and cleared swaps industry.
Nasdaq and Bcause announced on March 13, 2019, that Bcause would use Nasdaq’s matching engine, clearing and market surveillance tools through the Nasdaq Financial Framework platform to operate a spot cryptocurrency market. Bcause planned to launch its spot market within the next few months.
Bcause filed for bankruptcy in April 2019. Despite this, the company told Coindesk in early May that it planned on tentatively launching cryptocurrency spot trading services on May 23, 2019. By May 23, the company had not launched spot trading services. During that time Fred Grede and Bill Boyk were quietly removed from the company's website.
Bcause announced that it had closed Series A funding from SBI Holdings in October of 2017, and SBI took a 40 percent stake in the company.
In October 2018 Bcause announced that China Health Checkmate, an investment group managing family office assets and Asian-Pacific institutional funds, had agreed to be a "substantial" equity holder to help Bcause open its exchange and work on an Asia initiative to create new exchanges and asset-backed payment products.
Virginia Beach granted Bcause $500,000, based on the company spending at least $64.8 million in capital investment at its 84,000-square-foot rented space at 5465 Greenwich Road.
A review of the Bcause website on May 29, 2019, confirmed by a telephone call indicated that Frederick J. Grede, Chief Executive Office; Tom Hammond, Chairman of the Board of Directors; Scott Early, Director; and William Boyk, COO and CRO, had recently left the company. All four had previously worked for the Chicago Board of Trade.
Bankruptcy and Liquidation
Bcause Mining, LLC, the mining affiliate operating in Virginia Beach, Virginia, filed voluntarily for bankruptcy court protection under Chapter 11 on April 11, 2019 in order to reorganize its debts. Unsecured creditors included a Virginia power company ($1,459,267.38), the U.S. Customs and Border Patrol ($737,041.90), landlords, and staff.
The bankruptcy pleading was prompted by an order from a Virginia state court that the company pay amounts due Wesco for equipment and services related to the farming operation that would have led to the immediate garnishment of Bcause's bank account. Bcause continued to provide farming services to its mining customers. It laid off most of its staff in both Chicago and Virginia Beach as it abandoned its plans for futures trading and clearing.
Over the course of the next months, it became apparent that the three farming customers that provided 97% of Bcause's revenues would not renew their farming agreements with the company, which were due to expire in November 2019.
The company continued throughout the period to work on its plans for a spot bitcoin market. Bcause secured a commitment from its exchange software provider, Nasdaq, to license its trading software to a newly formed subsidiary, Bcause Secure, provided that it was paid all amounts in arrears and provided an advance license payment, totaling more than $1.2 million. Bcause asked the court for permission to sell Bcause Secure to a group of investors consisting of the company founders and other insiders. The court ordered Bcause to market and then try to auction Bcause Secure.
In July, Bcause began to buy defunct bitcoin miners from SBI, its largest customer and largest shareholder, refurbished them and began mining bitcoin for its own account.
As the company's financial and commercial prospects did not obviously improve during the course of the Chapter 11 bankruptcy U.S. Federal Bankruptcy Court Judge Janet Baer ordered the company into Chapter 7 bankruptcy on October 8, 2019, as a result of which, the company's assets would be liquidated under the direction of a trustee. The sale of Bcause Secure was allowed to proceed since bids were not due until October 11. Acceptance of any bids and disbursement of any funds from the sale of Bcause Secure would be supervised by the bankruptcy trustee.
Products and Services
- Bitcoin Mining
- Spot Trading - bcause plans to offer cryptocurrency exchange for Fiat currency and U.S. Dollars by May of 2018.
- Frederick J. Grede, Chief Executive Officer
- Tom Hammond, Chairman of the Board
- Scott Early, Director
- William Boyk, Chief Operating Officer and Chief Regulatory Officer
- Mike Adolphi, Chief Technology Officer
- Thomas Flake, Founder and Chief Marketing Officer
- ABOUT THE COMPANY. Bcause.
- BCause LLC Selects Connamara Systems as Technology Platform for new Bitcoin Exchange. Bob's Guide.
- The Rise of Bitcoin Factories: Mining for the Masses. Wall Street Journal.
- Trading Organization Associated Documents. CFTC.
- Trading Organizations - Designated Contract Markets (DCM). CFTC.
- bcause chosen for the FIA Expo. bcause.
- Nasdaq Licenses Tech to a ‘One-Stop Shop’ for Crypto Trading and Mining. CoinDesk.
- ‘One-Stop Shop’ for Crypto Mining and Trading to Launch Spot Market May 23. CoinDesk.
- ONE TEAM, ONE GOAL. Bcause.
- SBI Holdings acquires 40% stake in bitcoin options firm Bcause LLC. bcause and SBI.
- BCause LLC Form D. U.S. Securities and Exchange Commission.
- China Health Checkmate Commits to Initial Series B Funding for Bcause LLC. Press Release.
- Bitcoin Mining Firm Bcause Raises $5 Million As Cryptocurrency Recovers From Recent Lows. Crunchbase News.
- Virginia Beach bitcoin mining company that won $500,000 city grant files for bankruptcy. The Virginian-Pilot.
- ABOUT THE COMPANY. Bcause.
- Mining company files bankruptcy and reveals interesting debtors. The Block.
- Bcause in Talks With Bitmain, Others To Climb Out of Debt. John Lothian News.
- Bcause: “Not There Yet”. John Lothian News.
- Bcause bets it all on bitcoin. John Lothian News.
- Bcause LLC ordered into liquidation. John Lothian News.
- Back In Court With Bcause – Year End Report. John Lothian News.