Cryptocurrency exchange Bittrex has declared bankruptcy after closing its U.S. business.
“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,” the company announced on its website Monday (May 8).
“This announcement does not impact Bittrex Global, which will continue operations as normal for its customers outside the U.S.”
The news comes amid a flurry of regulatory activity involving the crypto industry, including charges last month by the Securities and Exchange Commission (SEC) against Bittrex and its co-founder and former CEO William Shihara.
As PYMNTS reported, the SEC accused the company of facilitating the trading of crypto assets offered and sold as securities; acted as a broker, exchange and clearing agency without registering with the SEC; and worked to conceal its offering of securities from regulators.
“As alleged in our complaint, Bittrex and issuers that it worked with knew the rules that applied to them but went to great lengths to evade them by directing issuer-applicants to ‘scrub’ offering materials of information indicating that certain crypto assets were securities,” SEC Chair Gary Gensler said last month.
A Bittrex spokesperson responded on Twitter, saying the company did not offer or trade securities on its platform, nor did it offer products that were investment contracts.
The statement went on to say that Bittrex had for five years asked the SEC for notice of specific conduct the agency thought broke securities laws, but never got the information.
The company’s bankruptcy filing is happening at a time when the SEC has increased its focus on crypto-related enforcement.
Last year, the agency brought 30 enforcement actions against the industry, a 50% increase from 2021. And the 13 actions handed out is on pace for an increase of 25% over last year, PYMNTS reported last week.
In total these actions represent more than 30% of the SEC’s history of enforcement of crypto companies, which began nearly 10 years ago. Of those actions, nearly three-quarters involved unregistered securities offerings.
This period has also seen pushback from crypto companies that — like Bitrtrex — say they want more clarity from U.S. regulators.
As for Bittrex customers whose funds are still on the platform, the company said those coins remain secure, according to its announcement.
“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,” Bittrex said.
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