Bittrex, Inc together with its two Malta-based subsidiaries and Desolation Holdings LLC have filed for Chapter 11 bankruptcy in the District of Delaware.
Court documents state that Bittrex has 100,000 creditors and estimated assets and liabilities of between $500 million and $1 billion to be settled in bankruptcy.
The US Securities and Exchange Commission (SEC) has previously accused former Bittrex CEO William Schiehare and others associated with him of violating securities laws. Liechtenstein-based Bittrex Global GmbH was not included in the application.
The US Treasury Department's Office of Foreign Assets Control (OFAC) and the Financial Crimes Enforcement Network (FinCEN) in October accused the company of violating the Bank Secrecy Act and forced it to pay about $29 million in compensation.
The SEC accuses Bittrex, Inc and Bittrex Global of operating an unregistered securities exchange. The company's main creditor named in the bankruptcy filing, according to OFAC, is claimed to be $24.2 million. Crypto wallet is second among the creditors with claims of $14.5 million.
It should be noted that similar statements were filed by other cryptocurrency exchanges, such as FTX, BlockFi, Celsius and Voyager Digital, before this statement from Bittrex became official.
In March, Bittrex announced its intention to cease operations in the US by April 30. At the same time, due to the reduction of the cryptocurrency market as a result of bankruptcies and failures of other digital currency companies, the exchange cut 83 employees.
The lawsuit against Bittrex for allegedly illegally operating a securities exchange shows that all exchanges must comply with securities regulations. The bankruptcy filing and actions taken against Bittrex are also a reminder to other cryptocurrency corporations of their obligation to comply with the law.