Bittrex Files For Bankruptcy Following SEC Charges; Will Continue Serving Non-US Clients

Bittrex, a U.S.-based blockchain digital asset trading platform, announced its bankruptcy this week, days after it winded down its operations in the country post the regulatory crackdown by the Securities and Exchange Commission.

"Having previously announced that Bittrex, Inc. would be ceasing all operations in the U.S. effective April 30th, we have now made the decision to file Chapter 11 bankruptcy in federal court in Delaware," the crypto company said in a press release.

The crypto exchange platform filed Chapter 11 on Monday in the United States Bankruptcy Court for the District of Delaware. The exchange's decision covers Bittrex Inc., which is the business' Seattle-based firm. Its related entities - Desolation Holdings LLC, Bittrex Malta Holdings Ltd. and Bittrex Malta Ltd. - also entered bankruptcy, according to court papers. Bittrex Global GmbH, the Liechtenstein-based global entity for exchange, will remain in service and operational to its non-U.S. clients.

The company has over 100,000 creditors, between $500 million and $1 billion in assets and between $500 million and $1 billion in liabilities, a court filing revealed.

Bittrex also assured those who were not able to withdraw their funds from the platform before the end of last month that their funds are safe and they will regain access to these funds through proceedings.

"For those customers who did not withdraw their funds from the platform prior to the end of April, your funds remain safe and secure, and our main priority is to ensure that our customers are made whole," the exchange noted.

"While the Bankruptcy Court will ultimately decide the method by which those funds can be claimed by and distributed to our customers, we intend to ask the court to activate those accounts as soon as possible so that customers meeting the necessary regulatory requirements will be able to withdraw them," Bittrex further said.

The U.S. SEC filed charges against Bittrex and its former CEO Bill Shihara on April 17.

The financial watchdog claimed that Bittrex raked in more than $1.3 billion in revenues from its investors in the U.S. while operating as an exchange broker and clearing agency despite that not having registered with any authority in the country.

"Bittrex and issuers that it worked with knew the rules that applied to them but went to great lengths to evade them by directing issuer-applicants to 'scrub' offering materials of information indicating that certain crypto assets were securities," SEC Chairman Gary Gensler said in a statement.

"Further, Bittrex, as alleged, failed to register and comply with U.S. securities laws as an exchange, broker-dealer, and clearing agency. Cosmetic alterations did nothing to change the underlying economic realities of the offerings and Bittrex's conduct," he added.

Before the charges from the SEC, Bittrex announced in March that it is suspending its U.S. operation on April 30, citing "continued regulatory uncertainty in the country."