Bittrex, a popular crypto trading exchange, has filed for Chapter 11 bankruptcy protection in the US Bankruptcy Court for the District of Delaware. This move comes three weeks after the United States Securities and Exchange Commission (SEC) filed a lawsuit against Bittrex and its co-founder and former CEO, William Shihara.
The SEC charged the exchange for allegedly operating an unregistered national securities exchange, clearing agency, and broker house. Additionally, the SEC filed another charge against Bittrex Global.
According to the bankruptcy filing, Bittrex has over 100,000 creditors, with assets ranging between $500 million and $1 billion and liabilities between $500 million and $1 billion.
The filing covered various Bittrex entities, including Seattle-based entity Bittrex Inc, Bittrex Global GmbH, two entities in Malta, and an affiliated entity Desolation Holdings LLC. However, Bittrex’s global entity based in Liechtenstein was not part of the bankruptcy filing.
OFAC tops the list of Bittrex creditors with a claim of $24.2 million, followed by a crypto wallet with a claim of $14.5 million. FinCen is the top 50 creditor with a claim of $3.5 million, while the US SEC has an “undetermined amount of claims.”
Bittrex has had a tough year, starting with reducing its workforce in February, laying off 83 employees. According to the trading platform, the market crash and the collapse and bankruptcy of many crypto firms in 2022 affected its operations.
In March, Bittrex announced plans to wind down its US operations by April 30 due to regulatory uncertainty, assuring customers their funds were safe but advised US customers to withdraw them before the slated date.
On April 17, the US SEC filed a lawsuit against the firm, alleging it operated an exchange for buying, selling, and trading crypto asset securities without proper registration. Three weeks after the lawsuit, the crypto exchange filed for bankruptcy. John Deaton, the lawyer representing thousands of XRP holders, blamed the SEC Chair Gary Gensler for Bittrex’s decision.
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