The U.S. arm of cryptocurrency exchange Bittrex filed for bankruptcy in Delaware Monday, six weeks after it announced it would cease U.S. operations due to regulatory uncertainty and three weeks after the Securities and Exchange Commission charged it with operating an unregistered securities exchange.
Bittrex, headquartered in Seattle, announced on March 31 it would cease U.S. operations on April 30. According to its bankruptcy filing, Bittrex Global, which is headquartered in Liechtenstein and serves non-U.S. customers, is not affected by the bankruptcy.
Bittrex has more than 100,000 creditors and estimated liabilities and assets between $500 million and $1 billion, court filings show.
For customers who did not withdraw their crypto assets prior to April 30, Bittrex is still holding them “safe and secure” and intends to ask the bankruptcy court to be able to reopen those accounts for customers to collect their funds.
Several crypto firms have filed for bankruptcy in the last year, including Celsius, Voyager Digital, FTX, and BlockFi. Prior to filing for bankruptcy, Bittrex experienced other challenges, including paying millions in sanctions in October and laying off 80 people in February.
In court filings, Bittrex Co-Chief Restructuring Officer Evan Hengel said customers would get a “100 percent like-kind cryptocurrency distribution” under its liquidation plan, and that customers would be able to access the Bittrex platform and withdraw their digital assets.
“The lack of regulatory clarity in the U.S. created a substantial negative economic impact on the digital asset industry and resulted in overlapping regulatory burdens and soaring regulatory costs, on both the state and federal level,” Hengel said, leaving Bittrex to face “an untenable regulatory and economic environment that compelled them to initiate a restructuring process and an orderly wind down of their U.S. operations.”
Bittrex CEO and co-founder Richie Lai tweeted that filing Chapter 11 was the “cleanest way to bury the baby.”