The popular crypto trading exchange Bittrex filed for Chapter 11 bankruptcy protection in the US Bankruptcy Court for the District of Delaware. This move comes three weeks after the United States Securities and Exchange Commission filed a lawsuit against it.
The US SEC charged Bittrex and its co-founder and former CEO, William Shihara, for allegedly operating an unregistered national securities Exchange, clearing agency, and broker house. It also filed another charge against Bittrex Global.
Bittrex Trading Platform Bankruptcy Details
According to the filing, the crypto exchange has over 100,000 creditors. Its assets were between $500 million and $1 billion, while the liabilities were between $500 million and $1 billion.
The bankruptcy filing covered different entities under Bittrex, including, Seattle-based entity Bittrex Inc, Bittrex Global GmbH, 2 entities in Malta, and an affiliated entity Desolation Holdings LLC. But Bittrex’s global entity based in Liechtenstein was not part of the bankruptcy filing.
🚨BREAKING: @BittrexExchange has filed for Chapter 11 bankruptcy.
The move comes less than a month after the @SECGov charged Bittrex and its CEO for operating an unregistered national securities exchange, broker, and clearing agency.
— Eleanor Terrett (@EleanorTerrett) May 8, 2023
Regarding its creditors, the bankruptcy filing revealed that OFAC topped the list among others with a claim of $24.2 million. Other Bittrex creditors include a crypto wallet with a claim of $14.5 million.
Notably, FinCen is the top 50 creditor with a claim of $3.5 million, while the US SEC has an “undetermined amount of claims.”
SEC Lawsuit And Bankruptcy Filing Follows Bittrex Plans To Wind Down
Bittrex exchange has had it very rough in 2023. The firm first reduced its workforce in February, laying off 83 employees. According to the trading platform, the market crash and the collapse and bankruptcy of many crypto firms in 2022 affected its operations.
Some of the crypto exchanges and lending platforms that were also affected by the market were Celsius, Voyager Digital, and the FTX exchange crash that wreaked havoc in the industry.
Later in March, Bittrex announced plans to wind down its US operations by April 30 due to regulatory uncertainty. In the announcement, Bittrex assured customers their funds were safe but advised US customers to withdraw them before the slated date.
By April 17, the US SEC filed a lawsuit against the firm, alleging it operated an exchange for buying, selling, and trading crypto asset securities without proper registration. Three weeks after the lawsuit, the crypto exchange filed for bankruptcy.
Notably, while responding to a Twitter post about the lawsuit, the lawyer representing thousands of XRP holders, John Deaton, blamed the SEC Chair Gary Gensler for Bittrex’s decision.
Think of all the investors @GaryGensler just protected. He will go down as quite possibly the worst SEC Chairman in history. It’s not even that difficult to come up with a regulatory scheme that would offer more protection to investors than exists today, and foster innovation. https://t.co/xxW9yLAGsY
— John E Deaton (@JohnEDeaton1) May 8, 2023
Featured image from Pexels and chart from Tradingview.com