Key Takeaways
- Bittrex has over 100,000 creditors, $500 million and $1 billion in assets, and between $500 million and $1 billion in liabilities
- The bankruptcy filing will not affect its parent company Bittrex Global which will continue to operate outside the United States
- In April, SEC charged the company and its co-founder and former CEO William Shihara for securities violations
On Monday, cryptocurrency exchange Bittrex filed for Chapter 11 bankruptcy protection in Delaware. The bankruptcy filing comes after the U.S. Securities and Exchange Commission (SEC) charged the company and its co-founder and former CEO William Shihara for operating as an unregistered exchange in April.
As per the bankruptcy filing, the crypto trading platform had $500 million and $1 billion in assets, and between $500 million and $1 billion in liabilities with its creditor numbers going over 100,000.
Bittrex in its official announcement has also stressed that the bankruptcy filing will not affect its parent company Bittrex Global which will continue to operate outside the United States. Bittrex Global’s two other subsidiaries, Bittrex Malta Holdings Ltd. and Bittrex Malta Ltd., have also filed for bankruptcy protection.
The latest bankruptcy filing follows Bittrex deciding to shut down its U.S. platform on April 30 after nine years of operation, citing an unfavourable U.S. regulatory and economic environment. The exchange has however added that it was still holding crypto assets of U.S. customers who did not withdraw funds before April 30.
Bittrex stated that it plans to ask the bankruptcy court for a limited re-opening of customer accounts so that the crypto could be distributed back to customers. Apart from the SEC scrutiny, Bittrex has also faced charges by the U.S. Treasury’s Office of Foreign Assets Control (OFAC) and the Financial Crimes Enforcement Network (FinCEN).
Last year, OFAC AND finCEN took regulatory action against Bittrex for allegedly violating sanctions programs as well as reporting requirements under the Bank Secrecy Act, or BSA. In an October 2022 statement, the U.S. Treasury stated Bittrex had agreed to a more than $24-million settlement with OFAC for violations of “multiple sanctions programs” in various countries
Bittrex’s latest bankruptcy filing indicates that OFAC has the highest claim among its creditors, amounting to $24.2 million. Following OFAC is a crypto wallet, which has a claim worth $14.5 million. FinCEN also secures a spot in the top 50 creditors with a claim of $3.5 million.
Bittrex’s downfall is a significant blow to the crypto industry, which is facing increased pressure from regulators and lawmakers worldwide. Bittrex was founded in 2014 and was one of the first exchanges to offer a wide range of crypto assets, including altcoins and tokens from initial coin offerings (ICOs).
At its peak, Bittrex had over 3 million users and handled billions of dollars in daily trading volume. The company was valued at over $1 billion in 2018 and had plans to launch an initial public offering (IPO) in 2020.
Bittrex is however not the only recent firm in the Web3 space to file for bankruptcy. Earlier this week, blockchain firm Tencent reportedly entered insolvency proceedings after failing to raise new funding.
