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BitPay Falls on Hard Times

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BitPay, the world’s leading Bitcoin payment processor, is going through a rough patch by the look of things. On September 17th, BitPay announced they will be suing one of its insurers, Massachusetts Bay Insurance Company (“MBIC”), for failing to honor the company’s claim following the loss of US$1.8 million in funds. On September 23rd, BitPay removed its “free and unlimited” Bitcoin payment processing option for new merchants. Last but not least, on September 25th, the company announced part of their staff has been laid off as part of “streamlining the company for the future.”

The news regarding one of their insurers refusing to pay back financial damages suffered by BitPay is worrying. even though the events originally transpired in December of 2014. All in all, a total of 5,000 bitcoins was taken from BitStamp due to a phishing and impersonation attack.

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As of September 15, 2015, BitPay’s legal team has filed an official claim for the lost funds in the US District Court for the Northern District of Georgia. In addition to the stolen funds, BitPay is seeking an additional US$950,000, not including any commercial damages and court fees.  

Little over a week later, on September 23rd, BitPay announced they were changing their Bitcoin payment processing plans. New users would no longer be able to sign up for the “free and unlimited” plan, although the company asserts that this decision should not have any impact on most small businesses. A new Starter Plan was introduced, with transactions being processed free of charge up to a daily volume of US$1,000; or 30 transactions per month.

Finally, on September 25, BitPay announced part of its staff had been laid off as a cost-cutting measure. For those whose job is not in immediate jeopardy, internal meetings will be scheduled to discuss the road ahead.