Another crypto exchange is shuttering its doors again, unless another billionaire investor jumps in to save the day, it looks like Bittrex might just join the likes of other fallen heroes like FTX, Celsius, and Three Arrows Capital (the crypto graveyard sure is getting big).
The move comes just weeks after the US Securities and Exchange Commission (SEC) charged the company, its co-founder, and former CEO William Shihara for allegedly “operating an unregistered national securities exchange, broker, and clearing agency” on 17 April.
Bittrex Closes in US After SEC Trouble
Following the SEC’s complaint, Bittrex announced that it would be shutting down operations in the US effective 30 April, saying it was “not viable” to continue operations under the current US regulatory and economic environment.
The bankruptcy filing includes its Seattle-based entity Bittrex Inc, two Bittrex entities based in Malta, and an affiliated entity, Desolation Holdings LLC.
The firm says the announcement does not impact Liechtenstein-based Bittrex Global, which will continue operations “as normal” for its customers outside the US.
In the bankruptcy filing, Bittrex Inc estimates to have over 100,000 creditors, between $500 million to $1 billion in assets, and between $500 million to $1 billion in liabilities.
In a statement, the company says: “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.”
Bittrex Could Still Survive With a Hail Mary
Not all is lost on the crypto Western Front, there is a small chance that Bittrex can survive, according to a new influx of cash.
Bittrex was approved to borrow $6.8 million in Bitcoin to fund its US Chapter 11 bankruptcy.
In the court hearing, which took place this week in Wilmington, Delaware, Bittrex’s lawyers said the exchange had enough crypto to return customer funds. The loan would instead be used to protect and ensure a smooth bankruptcy process for both customers and the company.
Will Borrowing Bitcoin Bail Them Out?
According to a Reuters report, Judge Brendan Shannon approved the loan, allowing Bittrex to borrow 250 bitcoin (BTC) on an interim basis from Aquila Holdings — its parent company.
Seattle-headquartered Bittrex is expected to ask for an additional 450 BTC ($12.2 million) in June. The company filed for bankruptcy on May 8.
However, it halted US operations at the end of April, days before the SEC sent both Bittrex US and Bittrex Global a Wells notice and sued Bittrex US for running an unregistered securities exchange. Bittrex Global is incorporated in Liechtenstein.
In the suit, the SEC alleges that six of the tokens listed on Bittrex fall under the definition of securities under current law, including Algorand (ALGO) and DASH. Bittrex did not immediately return a request for comment.