This is a bit of weak spin on the obvious news that they probably couldn't comply with the government requirements.
But it depends on where Hotz got his capital. We know it's not a big number. The compliance requirements might have cost more in consultants who are experienced in replying to such information requests, than his paid in capital to date, IF Hotz could find good consumtants in time.
It seems like he had alternatives: To delay roll-out and look for more capital, for example. But everything other than shutting down the project would cost a significant, and possibly, depending on Hotz's access to investors, an insurmountable amount of money within the time he had.
Shutting down might get regulators off his back long enough to take the project offshore.