Cryptocurrency trading platform Bittrex filed for Chapter 11 bankruptcy protection in the District of Delaware on May 8. In its filing with the United States Bankruptcy Court, Bittrex estimated it had over 100,000 creditors, assets and liabilities ranging from $500 million to $1 billion as part of the bankruptcy proceedings.
Entities Included and Excluded from Filing
The bankruptcy encompasses Seattle-based Bittrex, Inc., two Malta-based Bittrex entities, and affiliated entity Desolation Holdings LLC. However, Bittrex Global GmbH, the Liechtenstein-based global exchange entity, was not included in the filing.
SEC Charges and Bankruptcy Filing
This declaration comes after the U.S. Securities and Exchange Commission (SEC) charged Bittrex and its co-founder and former CEO, William Shihara, with securities violations in April. The SEC accused Bittrex, Inc. and Bittrex Global of operating an unregistered securities exchange. In October, the exchange faced charges related to Bank Secrecy Act violations from the U.S. Treasury’s Office of Foreign Assets Control (OFAC) and the Financial Crimes Enforcement Network (FinCEN), agreeing to pay approximately $29 million in a settlement.
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OFAC is the largest creditor listed in Bittrex’s bankruptcy filing, with the exchange recording a $24.2 million claim for the Office. Its next largest creditor is a crypto wallet with a $14.5 million claim. FinCEN is also listed as a top 50 creditor with a $3.5 million claim, while the SEC is listed with an undetermined amount of claims.
Bittrex’s Struggles in the U.S.
The SEC’s enforcement actions and Bittrex’s recent bankruptcy filing followed the company’s announcement in March that it would cease its U.S. operations by April 30, citing “continued regulatory uncertainty” in the country. Bittrex’s U.S. entity has faced a challenging year in 2023, cutting 83 employees in February due to the crypto market downturn caused by the collapses and bankruptcies of other crypto firms.
Other Crypto Firms Filing for Chapter 11 Protection
Bittrex’s bankruptcy is the latest in a series of other crypto exchanges or lending platforms that have also recently filed for Chapter 11 protection, including FTX, BlockFi, Celsius, and Voyager Digital.
As Bittrex faces bankruptcy, the SEC continues its campaign to regulate cryptocurrencies, asserting its authority to oversee digital coins and the platforms that trade them. This ongoing regulatory push has implications for the entire cryptocurrency industry.
