On 8th May 2023, US-based cryptocurrency exchange platform, Bittrex shut down its operation in Seattle and files for chapter 11 bankruptcy only after three weeks on SEC lawsuit. According to the SEC press release, Bittrex Global, the foreign affiliate failed to comply registration of revenues.
Key Highlights:
- SEC claims that Bittrex collected revenues without declaring them to the Commission.
- Over $1.3 billion was generated through revenue streams that were undeclared by Bittrex.
- Seattle based organization, Bittrex had to lay off 80 employees in March and filed Chapter 11 bankruptcy on May 8th.
- Bittrex Global will remain unaffected, and operations outside of the U.S will continue.
Unannounced Revenue Leads Bittrex to Bankruptcy
Claims read that Bittrex generated over $1.3 billion from brokerage, fees and various other methods which were not registered to the Commission. Moreover, within 2014 and 2019, Bittrex avoided regulatory scrutiny which further led to the lawsuit.
Bittrex was among one of the top cryptocurrency platforms in the U.S. but US Securities and Exchange Commission laid accusations of refusing to follow security rules. Now facing federal charges and allegations, Bittrex announced via its website that US customers must withdraw their funds before April 30, 2023. Even so, several users were not able to withdraw within time, and in response, Bittrex says:
“While the Bankruptcy Court will ultimately decide the method by which those funds can be claimed by and distributed to our customers, we intend to ask the court to activate those accounts as soon as possible so that customers meeting the necessary regulatory requirements will be able to withdraw them.”
Bittrex Finds Operating under U.S. Regulations as ‘Unclear’
The infamous cryptocurrency exchange platform, Bittrex claims that “it’s just not economically viable for us to continue to operate in the current U.S. regulatory and economic environment.” They took their thoughts to Twitter and shares their perspective.
Bittrex is finds the U.S. regulatory bodies being unclear and being enforced with rules without appropriate discussions which is turning out to be disadvantageous for the organization.
The users of Bittrex outside the U.S. can rest assured as operations in Bittrex Global is entirely unaffected by their bankruptcy filing. According to the Randall Reese (Chapter 11 Dockets), Bittrex has over 100,000 creditors and all assets and liabilities are within $500 million and $1 billion range.
The crypto giant was facing issues with U.S. regulations from way back in 2014, and in February 2023, over 80 employees had to be laid off. On April 1, Bittrex made it to the public about their decision and guided users towards claiming their assets from the cryptocurrency exchange platform.
Check out the entire Twitter thread to find out how Bittrex is assisting users with withdrawals and other additional issues.
Alongside Bittrex, several other entities such as Desolation Holdings LLC, Bittrex Malta Limited, and Bittrex Malta Holdings Limited also claimed bankruptcy under chapter 11. SEC claims also includes allegations on former CEO of Bittrex, William Shihara.
Bittrex and its associated entities also faced trouble in October as Office of Foreign Assets Control (OFAC) charged them for Bank Secrecy Act. Settlement of $29 million was made then between Financial Crimes Enforcement Network (FinCEN) and OFAC.
According to the bankruptcy filing of Bittrex, the largest creditor in the list is OFAC with a $24.2 million claim. FinCEN and SEC are also in the list among top 50, with $3.5 million claim by the former.
