Seattle-based cryptocurrency exchange Bittrex Inc has filed for bankruptcy protection, following accusations that they were operating an unregistered securities exchange. Operations in the United States ceased on April 30. With the bankruptcy filing having no impact on Bittrex Global, its international subsidiary based in Liechtenstein. Bittrex’s assets and liabilities, as stated in the Delaware court bankruptcy petition, range between $500 million and $1 billion.
Bittrex assures customers that their cryptocurrency assets, if not withdrawn before April 30, remain secure. They plan to request the bankruptcy court’s permission to partially reopen customer accounts, facilitating the distribution of crypto assets.
In the past year, numerous cryptocurrency companies faced bankruptcy. Due to declining asset prices, increased regulatory scrutiny, and potential criminal charges, exemplified by the FTX exchange.
On April 17, Bittrex was sued by the SEC. Alleging that former CEO William Shihara had encouraged token issuers to remove public statements that could prompt regulatory investigations into their offerings.
Bittrex denies these allegations, asserting that the crypto assets on its platform do not qualify as securities or investment contracts. While the lawsuit is ongoing, Bittrex previously agreed to pay a $29 million fine to the US Treasury Department for apparent violations of sanctions and anti-money laundering laws.
Bittrex’s largest unsecured creditor, listed in the bankruptcy petition, is the US Treasury Department’s Office of Foreign Asset Control, owed more than $24 million. Most other major creditors are customers of the exchange, with 16 customers holding at least $1 million in their undisclosed accounts. The petition also reveals that Bittrex’s largest remaining customer account holds assets valued at $14.6 million.
