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Monday, February 26, 2024

Crypto Exchange Bittrex Files for US Bankruptcy Protection

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On May 8, Bittrex Inc. filed for Chapter 11 bankruptcy protection for its U.S.-based operations. The move comes three weeks after the Securities and Exchange Commission (SEC) accused it of operating an unregistered securities exchange.

According to the filing, Bittrex had assets and liabilities each estimated to be worth between $500 million and $1 billion. It also stated that there were over 100,000 creditors.

The firm stated that it was still holding crypto assets of U.S. customers who did not withdraw funds before April 30, according to reports.

The funds are “safe and secure,” it said, adding that it intended to ask the court for a reopening of customer accounts to allow them to withdraw.

Bittrex Global Not Affected

The company also stated that its Liechtenstein-based offshore operations, Bittrex Global, were not affected by the bankruptcy filing. However, two other entities, Bittrex Malta Ltd. and Bittrex Malta Holdings Ltd., also filed for bankruptcy protection in the U.S.

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A Bittrex spokesperson clarified:

“This announcement does not impact Bittrex Global, which will continue operations as normal for its customers outside the U.S. For those customers who did not withdraw their funds from the platform prior to the end of April, your funds remain safe and secure, and our main priority is to ensure that our customers are made whole.”

The SEC took action against Bittrex on April 17, alleging that the firm and its executives were promoting and selling unregistered securities. Bittrex denied the allegations claiming that the assets it offered were not securities.

U.S. Congress has yet to officially classify crypto assets as securities, so this is another case of the SEC taking the law into its own hands with extrajudicial enforcement actions.

U.S. Operations Already Shuttered

In late March, Bittrex announced the closure of its U.S. exchange amid the intensifying war on crypto from federal regulators. In October, Bittrex was fined $53 million for violating anti-money laundering (AML) laws.

Bittrex, established in 2014, was once one of the largest crypto exchanges in the U.S. It currently has a daily volume of around $7 million and offers 799 trading pairs, according to CoinGecko.

Crypto markets have continued their retreat today with a 1.8% decline dropping total capitalization to $1.18 trillion.

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