On Monday evening, cryptocurrency exchange Bittrex announced that its US-based subsidiary had filed for Chapter 11 bankruptcy. The reason for the shutdown lies in the regulatory uncertainty maintained by the US system.
Bittrex US files for bankruptcy
On Monday evening, cryptocurrency exchange Bittrex made official the shutdown of its US branch, filing for protection under the notorious Chapter 11 bankruptcy law in the United States.
However, this news does not come as a surprise to customers, who had been warned of the forthcoming cessation of activity as early as 31 March. Indeed, the investors concerned could still carry out transactions until 14 April, and they had until 30 April to withdraw their funds :
“Having previously announced that Bittrex, Inc. would cease all operations in the United States effective April 30, we have now made the decision to [file for bankruptcy] in a federal court in Delaware. This announcement does not affect Bittrex Global, which will continue to operate as normal for its customers outside the U.S. “
In addition, the company was keen to make it clear once again that this was only about its US branch, in the face of a number of shortcuts that may have been taken, headlining solely on the “Bittrex bankruptcy”:
As previously announced, and as re-confirmed in the Bittrex US statement on Monday, this process does not affect Bittrex Global, and our customers can rest assured that their funds are safe and our services will continue as usual.
– Bittrex Global (@BittrexGlobal) May 8, 2023
In light of these factors, customers registered in the United States who have not withdrawn their cryptocurrencies by the deadline should still receive their funds back in full. And for good reason, Bittrex said in its statement that it wanted to apply to the court to speed up the process for investors to access their cryptocurrencies.
US regulatory uncertainty blamed
Note that the reason for this failure does not seem to lie in any contagion, but rather on the side of US regulation. Indeed, given what has been announced, it is the country’s legal vagueness that would have ultimately dissuaded Bittrex from doing business in the United States, as the company pointed out at the end of March:
Today, Bittrex begins the process of shutting down its U.S. operations. Don’t worry, all customer funds are safe and available for withdrawal; however, it is simply not economically viable for us to continue operating in the current US regulatory and economic environment. “
On 17 April this year, the Securities and Exchange Commission (SEC) took aim at Bittrex’s US arm on the grounds that it was operating a securities exchange without the necessary registrations:
Today we charged crypto asset trading platform Bittrex Inc. and its co-founder and former CEO William Shihara for operating an unregistered national securities exchange, broker, and clearing agency.https://t.co/kBsIFMp7ZA
– U.S. Securities and Exchange Commission (@SECGov) April 17, 2023
While on several occasions in recent months we have speculated that the SEC’s actions might motivate ecosystem players to move away from the US, here we have a concrete example.