cryptocurrency exchange Bittrex Inc. filed for bankruptcy protection following claims by the U.S. Securities and Exchange Commission (SEC) that it ran an unregistered securities exchange. The Seattle-based company shut down its American operations on April 30 and filed for bankruptcy in Wilmington, Delaware, claiming that the value of its assets and obligations was between $500 million and $1 billion.
Bittrex has denied the SEC’s allegations, claiming that the crypto assets on its platform were not securities or investment contracts. However, it had agreed to pay the U.S. Treasury Department $29 million in fines for “apparent violations” of the law’s anti-money laundering provisions and sanctions against specific nations.
Bittrex’s non-U.S. activities in Liechtenstein, which cater to clients outside of the United States, won’t be impacted by the bankruptcy case. A restricted reopening of customer accounts is what the company plans to request from the bankruptcy court in order to return the crypto assets to customers who are U.S. citizens but did not withdraw money before April 30.
Bittrex’s bankruptcy filing is the most recent setback for the cryptocurrency sector, which has seen a number of businesses fail over the past year as a result of falling asset values, increased regulatory attention, and legal troubles. As long as the SEC’s action against the company is underway, Bittrex’s future is uncertain.
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