Bittrex files Chapter 11 bankruptcy following SEC charges

By Sarah Lizee

Olympia, Wash., May 8 – Desolation Holdings LLC, which does business as Bittrex, and two affiliates filed Chapter 11 bankruptcy on Monday in the U.S. Bankruptcy Court for the District of Delaware, according to a press release.

The cryptocurrency platform had announced on March 31 that it would be ceasing all operations in the United States, effective April 30.

At the time, the company said this was a direct result of “continued regulatory uncertainty and a lack of interest from U.S. regulators regarding sensible policies that will foster innovation and enhance the American economy.”

Soon after the announcement was made, the Securities and Exchange Commission charged the company with operating an unregistered national securities exchange, among other things.

In response, Bittrex argued that it had provided a trading platform for digital assets, and securities were not offered or traded on Bittrex, nor did it offer any products that were investment contracts.

“Bittrex operated within the parameters of the law at all times, and we look forward to vindicating our position in court,” the company had said in an April 17 release.

The company said Monday that the filing doesn’t impact Bittrex Global, which will continue operations as normal for its customers outside the United States.

“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,” the company said in the release.

“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.”

In its petition, the company listed more than 100,000 creditors, $500 million to $1 billion in assets and $500 million to $1 billion in liabilities.

Its largest unsecured creditors are the Department of the Treasury’s Office of Foreign Asset Control, based in Washington, D.C., with a $24.28 million settlement claim, and the Financial Crimes Enforcement Network, based in Vienna, Va., with a $3.5 million settlement claim. Seven customer claims are listed in between the settlement claims. They range from $3.91 million to $14.59 million.

Quinn Emanuel Urquhart & Sullivan LLP is general bankruptcy counsel. Berkeley Research Group, LLC is restructuring adviser.

Bittrex is a cryptocurrency trading platform with headquarters in Seattle. The Chapter 11 case number is 23-10597.

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