- Crypto
- May 9, 2023
- 4 minutes read
U.S. Crypto Exchange Bittrex Files For Bankruptcy
Bittrex, a popular cryptocurrency exchange, has filed for Chapter 11 bankruptcy in a U.S. court. The company filed a bankruptcy…
Bittrex, a popular cryptocurrency exchange, has filed for Chapter 11 bankruptcy in a U.S. court. The company filed a bankruptcy petition in a Delaware court listing both assets and liabilities of between $500mn and $1bn. The exchange says it owes money to over 100,000 creditors, mostly its users.
- This case feels more like a strategic bankruptcy than an unavoidable one; it only affects Bittrex’s U.S. operations but not its non-U.S. operations based in Liechtenstein.
The bankruptcy notably comes three weeks after the U.S. Securities and Exchange Commission (SEC) filed a lawsuit accusing Bittrex of operating an unlicensed securities exchange. The SEC also accused Bittrex’s foreign affiliate, Bittrex Global, of the same violation because it shared a single order book with the U.S.-based parent firm.
According to the SEC, Bittrex earned $1.3bn in revenue from 2017 to 2022 from its exchange. Shortly after the lawsuit, Bittrex announced that it was ceasing all U.S. operations and followed through on the 30th of April. A bankruptcy filing caps the end of its U.S. operations, even as Bittrex previously claimed it was looking forward to “vindicating our position in court.” Bittrex co-founder and CEO Richie Lai tweeted that the bankruptcy filing was the “cleanest way to bury the baby.”
- Bittrex said customer funds are “safe and secure” and that “our main priority is to ensure that our customers are made whole.” The company says the bankruptcy court will determine the best way to return assets to customers.
According to the bankruptcy filing, Bittrex’s largest creditors are mostly customers, including 16 accounts with at least $1mn of cryptocurrencies. However, the number one creditor is the U.S. Treasury Department’s Office of Foreign Asset Control (OFAC), to which Bittrex owes $24mn.
The U.S. Treasury debt stems from a fine Bittrex agreed to pay the agency last October for violating anti-money laundering and suspicious activity reporting requirements. In that same case, Bittrex also agreed to pay a $29mn fine to the agency’s Financial Crimes Enforcement Network (FinCEN).
- Bittrex is the latest crypto platform catering to U.S. customers to file for bankruptcy, joining fellow exchange FTX and lenders including BlockFi, Celsius, and Voyager.
