Bittrex Inc. and several affiliates went bankrupt on Monday after its US operations were shut down at the end of April in response to a regulatory crackdown.
The bankruptcy, which the company said doesn’t impact its non-US operations, comes less than a month after the US Securities and Exchange Commission accused the crypto platform of having flouted securities rules for years.
Bittrex Global will continue operating as normal for customers outside the US, the company said in a statement. For users who didn’t withdraw their assets before the shutdown, Bittrex intends “to ask the court to activate those accounts as soon as possible so that customers meeting the necessary regulatory requirements will be able to withdraw them.”
Bittrex listed assets and liabilities of as much as $1 billion each in its Chapter 11 petition. Related entities Desolation Holdings LLC, Bittrex Malta Holdings Ltd. and Bittrex Malta Ltd. also entered bankruptcy, court papers show.
The SEC sued Bittrex in federal court last month, alleging it broke the regulator’s rules from 2017 through 2022 while bringing in at least $1.3 billion in revenue. The SEC said Bittrex at times acted as a brokerage, exchange, and clearing agency, but didn’t register with the SEC.
Bittrex disputed the allegations in a statement at the time.
That was just the latest regulatory hurdle for Bittrex. The company listed the US Treasury’s Office of Foreign Assets Control as its biggest unsecured creditor, to which it owes $24 million from an earlier settlement for failing to prevent customers in Iran, Cuba and other sanctioned nations from using its platform.
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Bittrex Inc, a U.S. based cryptocurrency exchange, has declared bankruptcy and is shutting down its crypto platform after the U.S. Securities and Exchange Commission (SEC) accused the platform of violating securities laws over the past years.
Founded in 2013, Bittrex Inc is a Washington-based company that provides customers with a platform to buy and sell cryptocurrency. As one of the leading platforms of its kind, it is estimated that over 1.7 million users have used the Bittrex platform since its launch.
However, last week the SEC accused Bittrex Inc of a variety of securities violations, including failing to register its cryptocurrency trades as securities, tracking suspicious activities and implementing “poorly constructed safeguards”.
In response, Bittrex Inc has decided to shut down its U.S. operations and declared bankruptcy. The company is now in the process of selling off its platform to its UK-based subsidiary, a move that is likely to create more uncertainty in the crypto markets.
In a statement, Bittrex Inc said that “The decision to shutter its U.S. crypto platform was based on our recognition of the current regulatory environment, which made it impossible for us to continue to operate our business in an economically or commercially viable way.”
The SEC is continuing to investigate the company and their platform and is considering various actions that could be taken in light of the evidence presented.
Given the recent news of Bittrex Inc’s shuttered platform and bankruptcy, it remains to be seen what the long term impact on the crypto industry will be. While many are hopeful that the SEC’s investigation will lead to a better understanding of the rules and regulations governing digital assets, it is unclear what the future of the exchange and other cryptocurrency platforms will be.
For now, investors and industry watchers will have to wait and see what the next steps are taken by the SEC and Bittrex Inc.