Bittrex Files for Bankruptcy Following SEC Allegations

Crypto exchange Bittrex Inc sought bankruptcy protection on May 8th, 2023, three weeks after being accused by the U.S. Securities and Exchange Commission (SEC) of operating an unregistered securities exchange. The company halted its operations in the United States but assured that the bankruptcy filing would not affect Bittrex Global.

The assets and liabilities of Bittrex fall within the range of $500 million to $1 billion, as reuters has said stated in the bankruptcy petition filed in a Wilmington, Delaware court. Bittrex is still in possession of crypto assets belonging to U.S. customers who did not withdraw their funds before April 30th, 2023.

The SEC filed a lawsuit against Bittrex on April 17th, 2023, alleging that its former CEO, William Shihara, advised crypto asset issuers to remove public statements that could potentially prompt regulatory investigation into their token offerings as securities. Bittrex has refuted these allegations.

Bittrex had previously agreed to pay $29 million in fines to the U.S. Treasury Department for apparent violations of sanctions on specific countries and anti-money laundering laws. The company’s largest unsecured creditor, according to the bankruptcy petition, is the Treasury Department’s Office of Foreign Asset Control, with over $24 million owed.

Conclusion

Despite Bittrex ceasing its operations in the United States, the company ensures that its international counterpart, Bittrex Global, will remain unaffected. While the SEC lawsuit continues, Bittrex plans to facilitate the return of crypto assets to its U.S. customers and address its debts. This situation highlights the challenges faced by the crypto industry, as increased regulatory scrutiny and market fluctuations continue to impact companies in this rapidly evolving sector.