Crypto Exchange Bittrex Files for Bankruptcy In Response to US Regulatory Crackdown
On Monday, May 8, crypto exchange Bittrex and several of its affiliates filed for Chapter 11 bankruptcy after shutting down its US operations in April following a major crackdown by the U.S. Securities and Exchange Commission (SEC).
The filing for bankruptcy comes with a month’s time of the US SEC accusing the crypto platform of flouting securities rules for several years. In its complaint, the securities regulator noted that Bittrex functioned in the US as “an unregistered national securities exchange, broker, and clearing agency.”
While charging the crypto exchange last month, Gurbir Grewal, Director of the SEC’s Division of Enforcement, said: “Today’s action not only holds Bittrex accountable for misconduct that we allege put investors at risk, but should also send a message to other non-compliant crypto market intermediaries to follow the federal securities laws or be held accountable for their violations.”
In its recent filing of bankruptcy, Bittrex said that this won’t impact the exchange’s non-US operations. For customers outside the US, Bittrex Global will continue to operate normally, the company said in a statement.
Bittrex is also making an effort to help users who didn’t withdraw their assets before the shutdown of the exchange. The crypto exchange said it intends “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.”
As per the Chapter 11 bankruptcy petition, the total listed assets and liabilities of crypto exchange Bittrex are as much as $1 billion each. The court papers show that entities liked to Bittrex such as Desolation Holdings LLC, Bittrex Malta Holdings Ltd. and Bittrex Malta Ltd. have also entered bankruptcy.
Last month, the US SEC sued crypto exchange bitter in the federal court alleging that it broke federal laws during its operations from the period between 2017 through 2022 while bringing a total of $1.3 billion in revenue at least. Back then, Bittrex disputed the allegations and said that out would contest them in the court of law. However, no such exchange has been initiated from the crypto exchange so far.
This has been a major regulatory hurdle for crypto exchange Bittrex. Furthermore, the crypto exchange has also listed the US Treasury’s Office of Foreign Assets Control as its biggest unsecured creditor, to whom it currently owes more than $24 million from an earlier settlement for failing to prevent customers from sanctioned nations such as Iran.