Bittrex Files For Chapter 11 Bankruptcy After SEC Charges
Bittrex Inc., a once-popular cryptocurrency exchange, has filed for Chapter 11 bankruptcy protection in Delaware following a Securities and Exchange Commission (SEC) lawsuit against the company for allegedly running an unregistered exchange, broker, and clearing agency.
As previously announced, and as re-confirmed in the Bittrex US statement on Monday, this process does not affect Bittrex Global, and our customers can rest assured that their funds are safe and our services will continue as usual.
— Bittrex Global (@BittrexGlobal) May 8, 2023
Bankruptcy Protection
In a court filing, Bittrex said it had assets and liabilities each estimated to be worth between $500 million and $1 billion, and more than 100,000 creditors. Two other Bittrex entities, Bittrex Malta Ltd. and Bittrex Malta Holdings Ltd., also filed for bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware.
The bankruptcy filing comes just weeks after Bittrex announced it would leave the U.S. market, citing the country’s regulatory environment. Bittrex was once one of the largest exchanges in the U.S., with a market share of nearly 23% at the start of 2018, according to data from The Block. However, its market share has collapsed to below 1% in 2021 and has not recovered since.
Despite the bankruptcy filing, a Bittrex Inc. spokesperson has assured customers that their funds remain safe and secure, and the company’s main priority is to ensure customers are made whole. Bittrex Global, the company’s international arm, will continue to operate as usual for its customers outside of the U.S.
Legal Cover in SEC Lawsuit
The bankruptcy filing may also provide some legal cover for Bittrex as it faces the SEC lawsuit. Chapter 11 bankruptcy protection allows a company to reorganize and negotiate with its creditors while continuing to operate its business. Bittrex could use this time to reach a settlement with the SEC and address any other outstanding legal issues.
However, it remains unclear what impact the bankruptcy filing will have on Bittrex’s future plans. The company had previously announced its intention to leave the U.S. market, but it is uncertain if it will continue to operate in other countries or shut down completely.
The news of Bittrex’s bankruptcy filing highlights the ongoing challenges faced by cryptocurrency exchanges in navigating the rapidly evolving regulatory landscape. As governments around the world continue to tighten their oversight of the cryptocurrency industry, exchanges must ensure they are fully compliant with local regulations to avoid legal trouble and maintain the trust of their customers.
