Crypto exchange Bittrex has filed for bankruptcy in the U.S. state of Delaware on Monday, months after announcing it would wind down operations in the country and weeks after being sued by the Securities and Exchange Commission (SEC).
Bittrex’s U.S. branch has had a rough 2023 so far, laying off 80 people in February and announcing in March that it would end all operations by the end of April. These changes have not affected the company Global, the non-U.S. crypto exchange.
Despite Bittrex’s impending exit from the U.S., the SEC sued it in mid-April on allegations it operated a national securities exchange, broker and clearing agency. The SEC also sued former company CEO Bill Shihara and Bittrex Global. The company’s CEO Oliver Linch said last month that the exchange intended to fight these charges in court, but a bankruptcy proceeding may make this more difficult.
The exchange believes it has more than 100,000 creditors, with estimated liabilities and assets both within the $500 million to $1 billion range, according to a court filing shared by Randall Reese of Chapter 11 Dockets, a bankruptcy tracker.
Bittrex is the latest crypto entity to file for bankruptcy, joining fellow exchange FTX and a host of lenders like Celsius, Voyager and BlockFi.
Bittrex’s troubles in the U.S. began in December, when it announced that it would remove several dozen cryptocurrencies from its platform due to regulatory concerns. The exchange cited guidance from the Financial Crimes Enforcement Network (FinCEN) and the SEC as the reasons behind the move.
The SEC’s lawsuit against Bittrex alleges that the exchange “has engaged in unregistered offerings of securities, failed to register as a national securities exchange, and failed to register as a broker-dealer with the SEC.” The SEC also claims that Bittrex “failed to comply with critical anti-money laundering (AML) obligations.”
Bittrex responded to the SEC’s lawsuit in a statement, saying that it “believes it has always acted in compliance with the law.” The exchange also said that it “has been proactively working with regulators to address concerns regarding its platform.”
Bittrex Global, the non-U.S. crypto exchange, has not been affected by these regulatory issues and continues to operate normally.
Bittrex’s bankruptcy filing comes at a time of increased scrutiny of the crypto industry by regulators. The SEC has been particularly active in this regard, filing lawsuits against several companies in the space in recent months.
While some in the crypto industry have criticized the SEC’s actions as overly aggressive, others have welcomed them as a necessary step toward ensuring that the industry operates within the bounds of the law.
Bittrex’s bankruptcy filing is likely to be seen as a setback for the crypto industry, which has been growing rapidly in recent years. However, it is not likely to have a significant impact on the overall health of the industry, which continues to attract new participants and investment.
In fact, some analysts believe that increased regulatory scrutiny may actually be beneficial for the industry, as it could lead to greater transparency and accountability. The news of Bittrex’s bankruptcy filing has raised concerns among crypto investors about the safety of their assets. Many are worried that they could lose their funds if exchanges continue to file for bankruptcy. However, Bittrex has assured its users that their funds are safe and that they will be able to withdraw them as usual.
Despite the challenges faced by Bittrex and other crypto entities, the underlying technology and potential for innovation in the space remain strong. As such, many in the industry remain optimistic about its long-term prospects, even as they navigate the current regulatory landscape.
