Crypto Exchange Bittrex Files for Bankruptcy Protection Following SEC Complaint

U.S.-based cryptocurrency exchange Bittrex Inc. has filed for Chapter 11 bankruptcy protection in Delaware less than a month after the United States Securities and Exchange Commission (SEC) charged the company for operating an unregistered national securities exchange, broker, and clearing agency. 

Two other related entities, including Bittrex Malta Ltd. and Bittrex Malta Holdings Ltd., also filed for bankruptcy protection. Notably, Bittrex Global, the non-U.S. crypto exchange, is not impacted.

Bittrex Lists OFAC as Its Top Creditor

According to the court filing, Bittrex has more than 100,000 creditors, between $500 million and $1 billion in assets, and between $500 million and $1 billion in liabilities.

Bittrex’s top creditor, according to the filing, is the Office of Foreign Asset Control (OFAC), which the exchange agreed to a $25 million settlement with for violating sanctions and anti-money laundering (AML) rules.

The exchange had previously announced last month that it would be winding down operations in the U.S. and laid off 80 staff in February.

According to Evan Hengel, the co-chief restructuring officer of Bittrex, customers would get a “100 percent like-kind cryptocurrency distribution” under its liquidation plan, enabling them to access the platform and withdraw their crypto assets.

Bittrex Cites Regulatory Challenges

The company cited the U.S. regulatory environment as one of the factors that contributed to its latest decision.

Bittrex “faced an untenable regulatory and economic environment” given “the lack of regulatory clarity in the U.S. [which] created a substantial negative economic impact on the digital asset industry and resulted in overlapping regulatory burdens and soaring regulatory costs,” Hengel said.

The exchange has now joined a growing list of industry firms to have filed for bankruptcy protection over the past year. Last November, FTX, a crypto exchange once worth a staggering $32 billion, filed for bankruptcy after experiencing a run on deposits. Crypto firms, including Celsius, Voyager, BlockFI, Genesis, have also entered bankruptcy during this period.