The move comes just three weeks after the Securities and Exchange Commission accused Bittrex of operating an unregistered securities exchange. The Seattle-based company ceased its operations in the US on 30 April 2023 and filed a bankruptcy petition in a Wilmington, Delaware court. The petition brought to light assets and liabilities between USD 500 million and USD 1 billion, and the company revealed that it is still holding the crypto assets of US customers who did not withdraw their funds before the end of April.
In this context, the company intends to ask the bankruptcy court for a limited re-opening of customer accounts that would allow it to redistribute the crypto assets in question back to clients. This would be significant considering that Bittrex listed 16 customers with at least USD 1 million in their accounts without giving away their names. According to Reuters, the largest remaining customer account at Bittrex has USD 14.6 million in assets.
The petition also revealed that Bittrex's largest unsecured creditor is the Treasury Department's Office of Foreign Asset Control with more than USD 24 million owed to it.
In April 2023, the SEC charged Bittrex with operating an unregistered national securities exchange, broker, and clearing agency. According to Reuters, the US Securities and Exchange Commission filed a complaint in a US district court in Washington against former CEO William Shihara that he allegedly worked with crypto asset issuers looking to make their tokens available for trading on Bittrex's platform to remove public statements that would cause regulators to investigate those token offerings as securities.
Bittrex replied with a statement that its platform was not used to offer or trade securities and that it did not offer products that were investment contracts. Furthermore, Bittrex Global stated that it has no customers in the US and that it will fight the SEC’s allegations in court. Regarding this recent bankruptcy filing, Bittrex said that it will not impact Bittrex Global, which serves customers outside the United States. The company's non-US operations are based in Liechtenstein, according to Reuters.
Reuters further reported that, in October 2022, Bittrex agreed to pay USD 29 million in fines to the US Treasury Department for ‘apparent violations’ of sanctions on certain countries and anti-money laundering law. Specifically, Bittrex failed to prevent people located in the sanctioned jurisdictions of Ukraine's Crimea region, Cuba, Iran, Sudan and Syria from using its platform between March 2014 and December 2017, according to OFAC.
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