Crypto exchange Bittrex files for bankruptcy after SEC complaint

May 8 (Reuters) – Cryptocurrency exchange Bittrex Inc filed for bankruptcy protection on Monday, three weeks after the U.S. Securities and Exchange Commission (SEC) accused it of operating an unregistered securities exchange.

Seattle-based Bittrex ceased operations in the US on April 30, and it said the bankruptcy filing would not affect Bittrex Global, which serves customers outside the US. The company’s operations outside the US are based in Liechtenstein.

Bittrex’s assets and liabilities were both between $500 million and $1 billion, according to a bankruptcy petition filed in Wilmington, Delaware court.

Bittrex said it was still holding crypto assets for US customers who did not withdraw money before April 30.

Those assets are “safe and secure” and Bittrex said it intended to ask the bankruptcy court for a limited reopening of customer accounts so the crypto could be distributed back to customers.

Several companies in the crypto industry have tumbled into bankruptcy over the past year, reeling from falls in asset prices, renewed regulatory scrutiny, and in the case of once-prominent exchange FTX, criminal charges.

The SEC sued Bittrex on April 17, alleging that former CEO William Shihara encouraged cryptoasset issuers seeking to make their tokens available on the company’s platform to delete public statements that could prompt regulators to investigate these token offerings as securities.

Bittrex has denied the SEC’s allegations, saying that crypto assets on the platform were not securities or investment contracts.

While the SEC’s lawsuit is pending, Bittrex had previously agreed to pay $29 million in fines to the US Treasury Department for “apparent violations” of sanctions against certain countries and anti-money laundering laws.

Bittrex’s petition listed the Treasury Department’s Office of Foreign Asset Control as the company’s largest unsecured creditor, with more than $24 million owed to the agency.

Bittrex’s other biggest creditors were mostly customers of the crypto exchange. Bittrex listed 16 customers with at least $1 million in their accounts, without identifying them by name. Bittrex’s largest remaining customer account has $14.6 million in assets, according to the filing.

Reporting by Dietrich Knauth; Editing by Mark Porter

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