The US subsidiary of Bittrex cited the “current US regulatory and economic environment” as the reason for shutting down its operations.
The cryptocurrency industry has seen a wave of bankruptcies over the past year, and now Bittrex, a US-based cryptocurrency exchange, has filed for Chapter 11 bankruptcy in the US Bankruptcy Court in Wilmington, Del. The Chapter 11 filing only covers Bittrex’s US affiliate, which is based in Seattle, Washington. According to the company’s statement, Bittrex Global will continue to operate without any disruption and serve its customers outside of the United States.
Reason for Bankruptcy
In March, Bittrex’s US subsidiary had announced that it would halt its operations in the country by the end of April citing the prevailing regulatory and economic environment. The company had already laid off most of its US employees before this decision. However, this wind-down did not stop the US Securities and Exchange Commission (SEC) from suing Bittrex for allegedly violating federal statutes by operating a national securities exchange, broker, and clearing agency, as reported last month.
Legal Action by SEC
Additionally, the SEC sued Bill Shihara, the former CEO of Bittrex and Bittrex Global. Tokens like OmiseGo , Algorand , Dash , TokenCard , i-House Token and Naga , according to the federal regulatory body, are securities, and Bittrex should have complied with SEC registration and transparency requirements before promoting these cryptocurrencies.
Gurbir Grewal, the Enforcement Director of SEC, stated that the legal action taken against Bittrex should act as a warning to other crypto market intermediaries who are not compliant with regulations. According to the complaint, Bittrex’s business approach involved bypassing the federal securities laws’ registration requirements, persuading issuers of crypto asset securities to do the same by modifying their offering materials, and consolidating several market intermediary functions to maximize profits, Grewal argued.
Payment to Customers
According to court papers, Bittrex Global’s CEO, Oliver Linc, stated that the company will contest the charges in court. The platform reassured customers who failed to withdraw their funds by the end of April that their funds are still secure, and the company’s primary objective is to ensure their full reimbursement. Nevertheless, the bankruptcy court will decide how the platform’s assets will be divided, with customers anticipated to receive full payment.
Crypto Industry and Bankruptcies
Several big names in the crypto industry have gone bankrupt in 2022, including FTX, Celsius Network, Voyager Digital, Three Arrows Capital, and BlockFi. The industry thought it had put the bankruptcies behind it since March, but Bittrex’s bankruptcy filing has once again reminded the crypto sphere that it is not immune. It remains uncertain whether other companies will join the list of crypto bankruptcies soon.
Disclaimer
The information presented in this Blogpost is solely for educational and informative purposes and should not be misconstrued as investment, financial or legal advice. Cryptocurrencies are a highly unstable and speculative market and their worth is susceptible to substantial fluctuations. Therefore, it is advisable to conduct personal research and seek counsel from qualified experts before making any financial decisions.
