This crypto exchange files for bankruptcy days after SEC lawsuit
- Bittrex filed for Chapter 11 bankruptcy days after shutting down operations in the US
- The announcement follows the SEC’s lawsuit against the exchange, which claimed a lack of registration
Crypto exchange – Bittrex – has reportedly filed for bankruptcy in the federal court of Delaware. In an announcement made on 8 May, the company stated that this decision would have no impact on Bittrex Global. The entity filing for bankruptcy was its US wing – Bittrex Inc.
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Moreover, the decision came only days after the exchange announced its exit from the US market. The reason for the exit was cited as regulatory scrutiny. The exchange had notified users to withdraw its funds by the end of April i.e., 30 April 2023.
In its press release, Bittrex stated that the funds of users who did not withdraw on the given deadline remained secure. The exchange also stated that its “main priority was to ensure that our customers are made whole.” Moreover, alongside Bittrex Inc., Bittrex Malta Holdings, Bittrex Malta Ltd have also filed for bankruptcy.
Furthermore, Randall G Resse – the President and Founder of Chapter 11 Dockets.com, highlighted the figures in the exchange’s bankruptcy filing. In a Tweet, he stated that
“Bittrex bankruptcy filings list more than $500 million in both assets and liabilities, and more than 100,000 creditors”
SEC’s action against Bittrex
Additionally, the announcement also follows the US Securities and Exchanges Commission’s (SEC) action against the exchange. The commission took aim at the US wing for not registering as a national security exchange, clearing agency, and a broker.
Notably, the lawsuit also extends to the exchange’s former CEO – William Shihara. The former executive was accused of conspiring with token issuers in removing statements that could draw the attention of the SEC.
This act took place during the listing of the tokens on the exchange. The SEC accused Shihara of prompting issuers to delete statements that could lead to the commission investigating the nature of the asset class. Speaking about this action, the company stated,
“The impact of the SEC’s approach of regulation by enforcement will have a chilling effect on not just cryptocurrency in the United States, but on blockchain technology and innovation in general.”
Moreover, the SEC’s lawsuit listed some top cryptocurrencies as securities. This included Algorand (ALGO), OmiseGo (OMG), and I-House Token (IHT). This claim was, however, met with a rebuttal from Bittrex, which said,
“While in operation, Bittrex provided a trading platform for digital assets. Securities were not offered or traded on Bittrex, nor did Bittrex offer any products that were investment contracts.”