Bittrex, a digital wealth exchange, has a request submitted for Chapter 11 in the US Bankruptcy Court for the District of Delaware.
Reduce activities in US
This comes just a month after the company announced that it would cut its US operations and a few weeks after the US Securities and Exchange Commission (SEC) accused it of running an unregistered securities exchange.
Bittrex, the digital wealth exchange, has filed for bankruptcy declared that its assets and liabilities range between $500 million and $1 billion, including Seattle-based Bittrex Inc, two Malta-based Bittrex entities, and an affiliated entity, Desolation Holdings LLC.
Bittrex Global GmbH, the global entity for the exchange based in Liechtenstein, was not included in the filing and the company stated that the US filing would not affect Bittrex Global, which will continue to serve customers outside the US.
This request is an escalation of the announcement of Bittrex on April 4 to close its US operations at the end of that month due to “ongoing regulatory uncertainty” in the US.
In a press release this Monday, the exchange assured customers that US funds not withdrawn before April 30 will remain safe. The bankruptcy court will decide on the procedures for distributing the remaining funds.
Accused of operating an unregistered securities exchange
US exchange Bittrex has decided to wind down its activities due to “legal uncertainty”, which was exacerbated by an April 17 SEC filing.
The SEC accused Bittrex of operating an unregistered securities exchange and alleged that since its launch in 2014, the company has been operating as a broker-dealer, exchange and clearing house without registering with the SEC. The SEC alleged that Bittrex had generated “at least $1.3 billion” in revenue since 2014, a significant portion of which came from customers in the US, placing those customers at “significant risk.”
Bittrex denied the allegations, claiming that the digital assets on its platform were not securities or investment contracts. In October 2022, Bittrex was also fined nearly $30 million for “deficiencies related to sanctions compliance procedures.”
The costly fine came as a close amid a market downturn and Bittrex likely sensed regulators were circling and therefore tried to abandon ship, but it seems it wasn’t quick enough to avoid the bankruptcy of its US entities.