This is quite a long write up for something that affected fewer than 10 people.

The most worrisome aspect is that the CEO to some extent lied about not firing people. That's probably the biggest red flag when it comes to a company: a CEO not willing to be honest with their people.

Well a ton more that didn’t get laid off borrowed money to exercise that have likely had their valuation crushed.

The fact that the C suite felt comfortable doing this (even if there were no layoffs) is completely rotten and indicates far more about them and the company than the number of people affected

It almost seems like securities fraud. Lie to the people you are encouraging to borrow money to buy stock?

Depends on the timing and the conditions, but if my CEO did that, I'd be looking for a way out.

YMMV, but this worked out quite well for me.

In my case I'd worked with the founder at their prior startup, where they saw a nice exit (but I was too late to significantly benefit). When I later joined their next startup, they offered a no interest loan to early exercise my options, so that I could go the 83b route and see some tax benefit.

Like I said, this ended up working out quit well for me.

I was more referring to lying about layoffs

I doubt this company will pursue those employees in court. That's a distraction from the core business. It could also backfire causing discontent amongst existing and future employees and a PR nightmare which will cost the business far more.

Instead they will just extend the loans forever. Then there is no tax payable either.

Sounds like a win-win for all parties involved.

Risk in these situations is that the company goes bankrupt and their creditors go after their loans.

They’ll sell to collections.

"The software programmer with the $100,000 loan said that his options were about to vest, which left him with two choices: He could sell the options back to Bolt, or go through with the purchase."

What sort of option agreement requires employees to immediately exercise on vesting? That seems odder than the rest of the story.

Yes, there are some key details missing here. Was the employee laid off? If he did , and the options didn't vest, then there is nothing to do here. They can't use the loan to exercise the options, because he has no vested options. If the employee wasn't laid off, then why does he have to pay off the loan?

Sometimes, you can early exercise options before they have vested. There can be some tax advantages to do this, but one pretty big disadvantage, is if you exercise options before they vest and you leave the company, then you don't get the options.

A 100K loan that is interest free is pretty generous. I'd happily take a 100K interest free loan.

The exercise window can be quite short. I'm in a similar situation with a 3 month exercise window about 3 years from now, with a valuation that's dropped significantly from when I purchased the warrants.

What the hell, I’ve only seen that for leaving/getting fired.

If you stay you get 10 years to exercise normally.

Most places have a 3 month window in my experience.

That seems incredibly employee unfriendly