Seattle-based cryptocurrency exchange Bittrex Inc filed for bankruptcy protection on May 9, three weeks after being accused by the US Securities and Exchange Commission (SEC) of operating an unregistered securities exchange. Bittrex ceased its operations in the US on April 30, but assured that the bankruptcy filing would not impact its operations in other parts of the world. The company’s non-US operations are based in Liechtenstein. According to a bankruptcy petition filed in Wilmington, Delaware court, Bittrex’s assets and liabilities were between US$500 million (RM2.2 billion) and US$1 billion. Bittrex has stated that it was still holding crypto assets of US customers who did not withdraw funds before April 30, and those assets are safe and secure. Bittrex intends to ask the bankruptcy court for a limited re-opening of customer accounts so that the crypto can be distributed back to customers.
Several crypto companies have tumbled into bankruptcy in the past year due to a drop in asset prices, renewed regulatory scrutiny, and criminal charges. The SEC sued Bittrex on April 17, alleging that former CEO William Shihara encouraged crypto asset issuers seeking to make their tokens available on the company’s platform to delete public statements that could lead regulators to investigate those token offerings as securities. However, Bittrex has denied the allegations, stating that the crypto assets on its platform were not securities or investment contracts. Bittrex had previously agreed to pay a fine of US$29 million to the US Treasury Department for “apparent violations” of sanctions on certain countries and anti-money laundering law. The company’s largest unsecured creditor listed in the petition was the Treasury Department’s Office of Foreign Asset Control, with more than US$24 million owed to the agency. The other largest creditors were mostly customers of the crypto exchange, with 16 customers having at least US$1 million in their accounts.