​Crypto exchange Bittrex files for bankruptcy

What’s new? Crypto exchange Bittrex filed for bankruptcy three weeks after the US Securities and Exchange Commission (SEC) accused it of operating without registration. According to the bankruptcy filing, filed May 8 in Delaware state court, Bittrex has between $500 million and $1 billion in assets and liabilities.

News on the Reuters website

The centralized crypto exchange (CEX) Bittrex was launched in the US in 2014. As of May 9, the daily trading volume is $8,34 million. The platform hosts 435 coins and 805 trading pairs.

Exchange’s actions within bankruptcy proceedings. Bittrex reported that the filing will not affect Bittrex Global, which is registered in Liechtenstein and serves customers outside the United States. That said, the exchange is still holding crypto assets of US customers who had not withdrawn their funds by April 30. According to the platform, these assets are perfectly safe, the team will ask the court for a limited opening of these accounts to distribute cryptocurrencies to customers.

Allegations against the exchange. In 2019, New York authorities issued a cease-and-desist order against Bittrex because of the risks of money laundering and sanctions circumvention through the platform. In October 2022, the US Treasury Department fined Bittrex $29 million for violating sanctions from 2014-2017 and facilitating $263,45 million in illegal transactions.

At the end of March 2023, Bittrex announced it would cease operations in the States. Co-founder Richie Lai said that it was not economically feasible to operate in the country because of the local regulatory environment.

According to the SEC’s lawsuit dated April 17, 2023, former Bittrex CEO William Shihara recommended that issuers of assets seeking to be listed remove public statements under which tokens could be classified as securities.

Bittrex had agreed to pay the fine to the Treasury Department at the time of the commission’s lawsuit. In the bankruptcy filing, the Treasury Department’s Office of Foreign Assets Control (OFAC) is listed as the largest unsecured creditor.

The other largest creditors were mostly customers of the exchange. Bittrex listed 16 customers with at least $1 million in their accounts without naming them. Bittrex’s largest customer has $14,6 million in their accounts.