The Bittrex Crypto Exchange, one of the prominent cryptocurrency exchanges in the United States, has officially filed for Chapter 11 bankruptcy in Delaware on Monday. This decision came less than a month after the Security Exchange Commission (SEC) accused Bittrex of violating security regulations repeatedly over several years.
The Bittrex exchange is estimated to have assets and liabilities worth between $500 million to $1 billion, according to court filings. Additionally, two other Bittrex entities, Bittrex Malta Ltd. and Bittrex Malta Holdings Ltd., also filed for bankruptcy protection in the same court on Monday.
Previous History of Bittrex Exchange and the SEC
The SEC had filed a lawsuit against Bittrex in April, alleging that the exchange was operating as an unregistered broker, exchange, and clearing agency. The lawsuit was a severe blow to the company, which had been one of the largest cryptocurrency exchanges in the US, with a market share of almost 23% in 2018. However, since 2021, the company’s market share has fallen below 1%.
The bankruptcy of Bittrex is not an isolated incident in the cryptocurrency industry, as other exchanges have also faced legal challenges recently. One of the recent examples is the Japanese cryptocurrency exchange bitFlyer, which was slapped with a lawsuit in April.
JUST IN: Bittrex #crypto exchange files for Chapter 11 bankruptcy.
Bittrex Bankruptcy Officially Announced
After filing for bankruptcy, Bittrex made public comments regarding the situation on their blog which can be found here. The bankruptcy proceedings will likely involve an assessment of the company’s financial position, the sale of assets, and the distribution of funds to creditors.
The bankruptcy of Bittrex is a stark reminder of the regulatory risks associated with the cryptocurrency industry. As the industry continues to grow, regulatory scrutiny is expected to intensify, and companies operating in this space will need to be vigilant in complying with regulations to avoid facing similar legal challenges.
Are Funds on Bittrex Safe?
The team at Bittrex Crypto Exchange reassured reassure its customers who did not withdraw their funds before the end of April that their funds remain safe and secure. The company said that its main priority is to ensure that its customers are made whole, and it is working towards that goal. Although the Bankruptcy Court will decide the method by which those funds can be claimed and distributed to the customers, Bittrex intends to ask the court to activate those accounts as soon as possible so that customers who meet the necessary regulatory requirements can withdraw their funds.