New Delhi: Seattle-based cryptocurrency exchange Bittrex Inc. has filed for bankruptcy protection after the US Securities and Exchange Commission (SEC) accused the company of operating an unregistered securities exchange. The bankruptcy filing will not affect Bittrex Global, which operates outside the US and is based in Liechtenstein. Bittrex has assets and liabilities both valued between $500 million and $1 billion, according to a bankruptcy petition filed in Delaware court.
The company ceased its US operations on April 30 but said that it would still be holding cryptocurrency assets of US customers who did not withdraw funds before that date. Bittrex has stated that these assets are safe and secure and that it plans to ask the bankruptcy court for permission to reopen customer accounts for a limited time to distribute crypto back to its customers.
Bittrex’s bankruptcy filing comes as several other cryptocurrency firms have fallen into bankruptcy in the past year due to a variety of reasons, including the decline in asset prices, increased regulatory scrutiny, and criminal charges. The SEC sued Bittrex on April 17, alleging that the exchange’s former CEO William Shihara encouraged crypto asset issuers to delete public statements that could lead regulators to investigate those token offerings as securities. Bittrex has denied these allegations, claiming that the crypto assets on its platform were not securities or investment contracts.
Bittrex had previously agreed to pay a $29 million fine to the US Treasury Department for apparent violations of sanctions on certain countries and anti-money laundering laws. The company listed the Treasury Department’s Office of Foreign Asset Control as its largest unsecured creditor, with over $24 million owed to the agency. Bittrex’s other major creditors were mostly customers of the exchange, with 16 customers listed as having at least $1 million in their accounts. According to the bankruptcy petition, the largest remaining customer account has $14.6 million in assets.
