Cryptocurrency exchange Bittrex filed for Chapter 11 bankruptcy protection in the US state of Delaware less than a month after its exit from the country. The bankruptcy only affects its US operation and not the global exchange.
“Having previously announced that Bittrex, Inc. would be ceasing all operations in the US effective April 30th, we have now made the decision to file Chapter 11 bankruptcy in federal court in Delaware,” Bittrex officially confirmed on Monday. “This announcement does not impact Bittrex Global, which will continue operations as normal for its customers outside the US.”
According to the court documents, the bankruptcy covers Seattle-based entity Bittrex, Inc, two Bittrex entities in Malta, and an affiliated entity, Desolation Holdings LLC. Its Liechtenstein-based entity, Bittrex Global GmbH, under which non-US services are offered, is not included in the bankruptcy proceedings.
Bittrex estimated that it had more than 100,000 creditors impacted by the bankrupt entities, with estimated liabilities and assets both within the $500 million to $1 billion range.
Bittrex bankruptcy filings list more than $500 million in both assets and liabilities, and more than 100,000 creditors pic.twitter.com/eBn2Q5yiem
— Randall G. Reese (@Chapter11Cases) May 8, 2023
“While the Bankruptcy Court will ultimately decide the method by which those funds can be claimed by and distributed to our customers, we intend to ask the court to activate those accounts as soon as possible so that customers meeting the necessary regulatory requirements will be able to withdraw them,” Bittrex added.
Regulatory Backlash Against the Crypto Exchange
Bittrex was founded in 2014 by three cybersecurity engineers, Bill Shihara, Richie Lai, and Rami Kawach, formerly employed in big tech firms.
The exchange terminated its US operations, trading on 14 April and withdrawals on April 30, citing it was not “economically viable… to continue to operate in the current US regulatory and economic environment.”
Meanwhile, the US Securities and Exchange Commission (SEC) also moved against the exchange, naming Bittex and its former CEO, Shihara, in a lawsuit. The regulator alleged that Bittrex violated registration requirements of the US federal securities law, instructed crypto issuers using its platform to delete certain information that indicated their digital assets were securities, and ran different market intermediary functions under one entity to maximize profits.
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