The U.S. arm of cryptocurrency exchange Bittrex filed for bankruptcy in Delaware on Monday, six weeks after it announced it would cease U.S. operations because of regulatory uncertainty and three weeks after the Securities and Exchange Commission charged it with operating an unregistered securities exchange.
Bittrex Global, which is headquartered in Liechtenstein and serves non-U.S. customers, is not affected by the bankruptcy.
“The lack of regulatory clarity in the U.S. created a substantial negative economic impact on the digital asset industry and resulted in overlapping regulatory burdens and soaring regulatory costs, on both the state and federal level,” Bittrex’s co-chief restructuring officer, Evan Hengel, said in Monday’s court filing.
That left Bittrex to face “an untenable regulatory and economic environment that compelled them to initiate a restructuring process and an orderly wind down of their U.S. operations,” Hengel said.
Bittrex CEO and co-founder Richie Lai confirmed the move in a tweet Monday, saying that filing Chapter 11 was the “cleanest way to bury the baby.”
Bittrex has more than 100,000 creditors and estimated liabilities and assets between $500 million and $1 billion, court filings show.
Bittrex announced March 31 that it would cease U.S. operations April 30. For customers who did not withdraw their crypto assets prior to April 30, Bittrex is still holding them “safe and secure” and intends to ask the bankruptcy court to be able to reopen those accounts for customers to collect their funds.
Customers would get a "100 percent like-kind cryptocurrency distribution" under Bittrex’s liquidation plan, Hengel said in Monday’s court filing, adding that users would be able to access the Bittrex platform and withdraw their digital assets.
Several crypto firms have filed for bankruptcy in the past year, including Celsius, Voyager Digital, FTX, and BlockFi. Prior to Monday’s filing, Bittrex experienced other challenges, including laying off 80 people in February and paying $29 million in October to resolve charges of sanctions violations.