Crypto exchange Bittrex has filed for bankruptcy in the US

On May 8th, Bittrex Inc, a cryptocurrency exchange based in Seattle, filed for bankruptcy protection following allegations by the U.S. Securities and Exchange Commission (SEC) that it had operated an unregistered securities exchange. The bankruptcy filing will only affect Bittrex’s operations in the United States, while its non-U.S. operations in Liechtenstein, known as Bittrex Global, will remain unaffected. The company’s assets and liabilities were estimated to be between $500 million and $1 billion, according to a bankruptcy petition filed in court in Wilmington, Delaware.

Bittrex has confirmed that it still holds crypto assets belonging to U.S. customers who have not withdrawn funds before April 30th, but it intends to request the bankruptcy court to reopen customer accounts on a limited basis so that crypto can be returned to the customers. The assets are reportedly “safe and secure”.

Over the past year, numerous companies in the crypto industry have gone bankrupt due to asset price declines, increased regulatory scrutiny, and criminal charges, such as FTX. Bittrex is facing a lawsuit from the SEC, which alleges that former CEO William Shihara encouraged crypto asset issuers seeking to make their tokens available on the company’s platform to remove public statements that could result in regulators investigating those token offerings as securities. Bittrex denies the allegations and argues that the crypto assets on its platform are not securities or investment contracts.

Although the SEC’s lawsuit is still pending, Bittrex had previously agreed to pay $29 million in fines to the U.S. Treasury Department for “apparent violations” of sanctions on certain countries and anti-money laundering law. In its bankruptcy petition, Bittrex lists the Office of Foreign Asset Control of the Treasury Department as its largest unsecured creditor, with over $24 million owed to the agency. Bittrex’s other significant creditors are mostly customers of the crypto exchange, with 16 customers holding at least $1 million in their accounts, according to the petition. The largest remaining customer account has $14.6 million in assets.

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