Bittrex cryptocurrency exchange announced that it has filed for bankruptcy protection just a few weeks after being charged by the US SEC for allegedly facilitating unregistered securities offerings. The filing for Chapter 11 bankruptcy protection was made in the U.S. Bankruptcy Court for the District of Delaware.
Recall that the SEC’s charges against Bittrex were made last month, and alleged that the exchange has facilitated the sale of unregistered securities by allowing certain Initial coin offerings (ICOs) to be conducted on its platform. Likewise, the SEC claimed that the firm has failed to register the offerings with the agency, as required by U.S. securities law.
Bittrex Hit a Downward Spiral After SEC’s Charges
Following the SEC charges, Bittrex faced significant financial challenges, as many investors and users withdrew their funds from the exchange.
Also, the SEC categorized six cryptocurrency tokens as securities in its lawsuit against Bittrex. Allegedly, the exchange was having a reasonable expectation of profits, hence the classification.
The resulting decline in trading volume and revenue likely contributed to Bittrex’s decision to file for bankruptcy protection. According to the filing, Bittrex had assets of between $500 million and $1 billion, liabilities in the same range, and over 100,000 creditors.
Bittrex Exits the US
Meanwhile, Bittrex started winding down its operations in the US attributing its decision to the nation’s unclear regulatory framework and poor economic conditions. Meanwhile, the exchange reassured its customers of the safety of their funds and gave a withdrawal deadline of April 29, 2023, noting that buying and selling on the system will come to an end on April 14, 2023.
However, in the recent bankruptcy filing, the exchange promised to appeal to the court to activate the accounts of customers who did not withdraw their funds from the platform prior to the end of April. As such, customers who meet the necessary regulatory requirements will have access to withdraw their funds.
Besides Bittrex, other exchanges including FTX Derivatives Exchange have gone under in recent months, fueling concerns about the long-term viability of the industry.
