Seattle-based crypto exchange, Bittrex Inc., has recently filed for Chapter 11 bankruptcy in Delaware, marking a significant event in the crypto industry. This comes on the heels of a lawsuit by the U.S. Securities and Exchange Commission (SEC), adding to the company’s woes. Despite these challenges, Bittrex’s international arm, Bittrex Global, is set to maintain its operations, serving customers outside the United States.
Bittrex Bankruptcy: What’s Happening?
Bittrex Inc. sought protection under Chapter 11 bankruptcy, a move triggered by significant financial liabilities ranging between $500 million and $1 billion. The decision follows a lawsuit from the SEC, accusing Bittrex of violating federal securities laws by operating as an unregistered national securities exchange, broker, and clearing agency. Notably, these charges were leveled despite Bittrex winding down its operations within the United States.
According to a press release from the beleaguered exchange, all client assets remain secure on the platform. Bittrex plans to make these assets available to customers once the Bankruptcy Court approves the method of funds distribution. Richie Lai, Co-founder and CEO of Bittrex, emphasized that the company still holds 100% of all customer funds and assured that a claims process would be established through the bankruptcy courts.
Bittrex’s Financial Obligations and Future Operations
An interesting revelation in Bittrex’s bankruptcy petition is its considerable debt to the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC). Bittrex owes the OFAC nearly $25 million, arising from a settlement reached in October last year concerning alleged violations of multiple sanctions programs and non-compliance with anti-money laundering requirements.
Despite the bankruptcy filing by Bittrex Inc. and affiliated entities, including Desolation Holdings LLC and Bittrex Malta Holdings Ltd, Bittrex Global will continue its operations. The international entity aims to serve non-U.S. customers, maintaining its usual operations amidst the financial challenges faced by its U.S. counterpart.
