Bittrex, the US-based cryptocurrency exchange, has filed for Chapter 11 bankruptcy protection after being charged by the SEC for operating an unregistered national securities exchange, broker, and clearing agency. The filing includes its Seattle-based entity and two Bittrex entities based in Malta, as well as an affiliated entity, Desolation Holdings LLC.
Cryptocurrency exchange Bittrex’s US entity has filed for Chapter 11 bankruptcy protection in a federal court in Delaware. The move comes after the US Securities and Exchange Commission (SEC) charged the company and its co-founder and former CEO William Shihara for allegedly “operating an unregistered national securities exchange, broker, and clearing agency” on April 17.
Following the SEC’s complaint, Bittrex announced that it would be shutting down operations in the US effective April 30, citing the unfavorable regulatory and economic environment. The bankruptcy filing includes its Seattle-based entity Bittrex Inc and two Bittrex entities based in Malta, as well as an affiliated entity, Desolation Holdings LLC.
However, the company says the announcement does not impact Liechtenstein-based Bittrex Global, which will continue operations “as normal” for its customers outside the US. In the bankruptcy filing, Bittrex Inc estimates to have over 100,000 creditors, between $500 million to $1 billion in assets, and between $500 million to $1 billion in liabilities.
For customers who did not withdraw their funds from the platform prior to the end of April, Bittrex says their funds remain safe and secure, and the company’s main priority is to ensure that their customers are made whole.
The Bankruptcy Court will ultimately decide the method by which those funds can be claimed by and distributed to customers, and Bittrex intends 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.