The lawsuit was filed against former CEOs Jake Soberal and Irma Olguin Jr. and the Bitwise board by eight former employees.
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The complaint says that Bitwise violated California's WARN Act by not providing a 60-day notice before furloughing all 900 of its employees on Memorial Day.
Former employees also say that Bitwise failed to pay them minimum wages while they were still employed and did not give them the money they were owed after being terminated from the company.
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Documents from the lawsuit go on to claim that Soberal and Olguin told potential investors that the company had at least $80 million in the bank in March of 2023.
In that same month, Bitwise cut off its direct payroll deposits and started to give employees paper checks instead.
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The complaint alleges that the company knew the paychecks were going to bounce but gave them out to their 900 employees anyway.
Following the mass furloughs, former employees claim that Soberal told investors that "Bitwise is done."
The lawsuit alleges that Bitwise tried to disguise the company-wide layoffs as a furlough in an attempt to mislead the public and former employees.