Crypto Exchange Bittrex Files for Bankruptcy in Delaware

Posted on 05/08/2023


Bittrex, Inc. has filed for bankruptcy in the U.S. state of Delaware on May 8, 2023. The exchange believes it has more than 100,000 creditors, with estimated liabilities and assets both within the $500 million to $1 billion range, according to a court filing. Bittrex Global is the non-U.S. crypto exchange. The lack of regulatory clarity in the U.S. created a substantial negative economic impact on the digital asset industry and resulted in overlapping regulatory burdens and soaring regulatory costs, on both the state and federal level. Bittrex claims that globally they had over 1.5 million active users through Bittrex, Inc., Bittrex Global GmbH, and Bittrex Global (Bermuda) Ltd. and over 5.4 million customers overall.

Months ago, Cryptocurrency exchange Bittrex announced its intention to exit the U.S. Bittrex also faces an SEC enforcement action. In April 2023, the SEC sued the exchange on allegations it operated a national securities exchange, broker and clearing agency. The SEC also sued former Bittrex CEO Bill Shihara and Bittrex Global.

Bittrex is the latest crypto entity to file for bankruptcy, joining peer exchange FTX and a host of crypto lenders like Celsius, Voyager, and BlockFi.

Initially, Bittrex, Inc. retained Lazard Ltd. and engaged in numerous discussions with a number of third parties regarding the possible sale of all or part of Bittrex’s
assets, including customer lists, and potential sources of new liquidity through debt or equity investments. Thereafter, Bittrex retained Quinn Emanuel Urquhart & Sullivan, LLP as its restructuring counsel (having previously retained Quinn Emanuel as its SEC defense counsel), and this engagement grew to include all of the Debtors, but no non-Debtor Bittrex affiliates.

According to filings, the Office of Foreign Asset Control of the U.S. Department of the Treasury has the biggest unsecured claim at US$ 24,280,829.20. The Vienna, Virginia-based Financial Crimes Enforcement Network (FinCEN) also has an unsecured claim for US$ 3.5 million.

The Bittrex owners are seeking to use their parent holding company Aquila Holdings Inc. to be the debtor-in-possession (DIP) lender. The DIP financing is up to 700 bitcoins (BTC) consisting of a delayed draw term loan facility to be used for general wind down, working capital, and liquidity purposes. For purposes of the Interim Order, the Debtors’ borrowing authority under the DIP Loan shall be capped at the Interim Amount Limit of 250 BTC.

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