BY Richard Summerfield
Cryptocurrency exchange Bittrex Inc has filed for Chapter 11 in the US Bankruptcy Court for the District of Delaware, just weeks after the company was accused of operating an unregistered securities exchange by the US Securities and Exchange Commission (SEC).
At the end of April, Seattle-based Bittrex halted its US operations and noted that its international customers, which are served by its global platform based in Liechtenstein, would not be impacted by its US bankruptcy. Bittrex, which was founded in 2014, said it has more than 100,000 US-based creditors. Its estimated liabilities are between $500m and $1bn, according to the court filing. The US Treasury’s Office of Foreign Assets Control (OFAC) emerged as the company’s largest creditor, with a substantial claim exceeding $24m.
In mid-April, the SEC sued Bittrex on allegations it operated a national securities exchange, broker and clearing agency. The SEC also sued former Bittrex chief executive Bill Shihara and Bittrex Global. Oliver Linch, chief executive of Bittrex Global. said last month that the exchange intended to fight the charges in court, but a bankruptcy proceeding may make this more difficult.
“Having previously announced that Bittrex, Inc. would be ceasing all operations in the U.S. effective April 30th, we have now made the decision to file Chapter 11 bankruptcy in federal court in Delaware,” said Bittrex in a statement announcing the bankruptcy filing. “This announcement does not impact Bittrex Global, which will continue operations as normal for its customers outside the U.S.
“For those customers who did not withdraw their funds from the platform prior to the end of April, your funds remain safe and secure, and our main priority is to ensure that our customers are made whole. 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,” he added.
In filings made at the Delaware Court, Evan Hengel, the co-chief restructuring officer of Bittrex, said that customers would get a “100 percent like-kind cryptocurrency distribution” under its liquidation plan, enabling them to access the Bittrex platform and withdraw their funds.
News: Crypto exchange Bittrex files for bankruptcy after SEC complaint