Crypto Exchange Bittrex Files For Bankruptcy After SEC Action

Cryptocurrency exchange Bittrex has filed for bankruptcy in the US following an enforcement action by regulators last month, which the company framed at the time as a “crusade to drive cryptocurrency out of the United States”.

The Seattle-based company, which had earlier ceased US operations at the end of April, said the bankruptcy would not affect its business outside the country operated by Liechtenstein-based Bittrex Global.

Bittrex said it continues to hold customer assets that were not withdrawn before the US shutdown and that plans to ask the bankruptcy court to reactivate those accounts so that “customers meeting the necessary regulatory requirements will be able to withdraw” the funds.

The company listed assets and liabilities of between $500 million (£396m) and $1bn each in its Chapter 11 documentation.

‘Crusade’

The US Securities and Exchange Commission sued Bittrex in federal court last month, saying it had broken rules from 2017 to 2022 by acting as brokerage, exchange and clearing agency without registering as such.

The company brought in $1.3bn in revenue during that period, the SEC said, claiming that former chief executive William Shihara encouraged crypto asset issuers seeking to list their tokens on the platform to delete public statements that could lead to regulatory scrutiny of those offerings as securities.

Bittrex denied the allegations and called the action “part of chairman [Gary] Gensler’s larger crusade to drive cryptocurrency out of the United States”.

The company added at the time that the SEC’s approach would have a “chilling effect on not just cryptocurrency in the United States, but on blockchain technology and innovation in general”.

Crypto crackdown

The company’s bankruptcy filing listed the US Treasury’s Office of Foreign Assets Control as its biggest unsecured creditor, to which it owes $24m from an earlier $29m settlement for failing to prevent customers in sanctioned countries such as Iran and Cuba from using the platform.

Its other largest creditors are mostly customers of the exchange, with 16 listed as having at least $1m in their accounts, the largest holding $14.6m in assets.

The SEC has clamped down on a number of firms in the largely unregulated crypto sector in recent months, even as the field has seen a number of high-profile bankruptcies that have meant billions of dollars in losses for investors.

In some cases, such as those of exchange FTX and collapsed cryptocurrency TerraUSD, the people behind the firms in question face criminal fraud charges.