On May 8th, Bittrex Inc, a cryptocurrency exchange, filed for bankruptcy protection. According to the bankruptcy filing, Bittrex's assets and liabilities are between $500 million and $1 billion.
Bittrex stated that it will cease operations in the United States on April 30th, and its bankruptcy filing will not affect the company's services to non US customers. Bittrex currently holds encrypted assets of US users who did not withdraw funds before April 30th. In response, Bittrex stated that these assets are secure and reliable, and they intend to request the bankruptcy court to reopen customer accounts with limited access in order to send cryptocurrency back to customers.
Three weeks ago, the US Securities and Exchange Commission (SEC) accused Bittrex of operating a stock exchange without registration. The SEC sued Bittrex on the grounds that former CEO William Shihara had urged cryptocurrency issuers on the platform to delete records that could lead to regulatory investigations.
Bittrex has denied this accusation, stating that its platform's encrypted assets are not securities or investment contracts. The SEC lawsuit is still pending, but Bittrex has previously agreed to pay a fine of $29 million to the US Treasury due to its "clear violation" of US sanctions policies and anti money laundering laws against certain countries.
Bittrex's largest creditor is the Office of Foreign Asset Control, a subsidiary of the US Treasury Department, which is Bittrex's largest unsecured creditor, guaranteeing over $24 million in debt.
Bittrex's second largest creditor is its cryptocurrency exchange client. Bittrex listed 16 customers with account assets of $1 million or more, but did not disclose their names. According to the petition, the customer account with the highest remaining funds has assets of $14.6 million.
In the past year, several encryption companies have filed bankruptcy filings, mainly due to falling asset prices and regulatory retrials. The former encryption giant FTX has been bankrupt due to criminal charges.
