Following months of financial difficulties and legal disputes with the Securities and Exchange Commission (SEC), the cryptocurrency exchange Bittrex filed for bankruptcy on Monday in the American state of Delaware. According to court filings provided by bankruptcy tracker Randall Reese of Chapter 11 Dockets, the exchange thinks it has more than 100,000 creditors and that its estimated obligations and assets are in the $500 million to $1 billion range.
With the exchange firing 80 workers in February and announcing in March that it will cease all operations by the end of April, Bittrex’s U.S. office has had a difficult year so far. The non-American cryptocurrency exchange Bittrex Global has not been impacted by these developments.
Despite Bittrex’s declaration that it will leave the U.S. market, the SEC sued the exchange in mid-April on the grounds that it had been operating illegally as a national securities exchange, broker, and clearing agency. Also being sued by the SEC are Bittrex Global, the parent company of the exchange, and former Bittrex CEO Bill Shihara. Oliver Linch, the CEO of Bittrex Global, said last month that the exchange wanted to challenge these allegations in court, but that a bankruptcy filing may make this more difficult.
The most recent cryptocurrency company to declare bankruptcy is Bittrex, following sibling exchange FTX and a number of lenders including Celsius, Voyager, and BlockFi. Recent market volatility has caused financial hardships for several sector participants due to regulatory uncertainty and increasing competition.
The filing for bankruptcy is a major blow for Bittrex and its US clients, who will probably lose the money they had on the exchange. Although Bittrex Global will continue to operate in other countries, the bankruptcy case highlights the dangers of making investments in the erratic and mostly unregulated cryptocurrency market.
Regulators are working harder to provide clear rules and regulation for digital assets as the crypto business develops. Although it is unclear how these changes will affect the larger crypto ecosystem, sector participants are expected to see more regulatory scrutiny in the years to come.