In a dramatic turn of events, Bittrex US, a popular cryptocurrency exchange, has filed for Chapter 11 bankruptcy in a Delaware federal court. This comes just weeks after the US Securities and Exchange Commission (SEC) accused the platform of running an unregistered securities exchange. Although the bankruptcy filing will not affect Bittrex Global, which caters to international customers, it has left many in the industry questioning the impact of such actions on other exchanges.
A statement from Bittrex co-founder Richie Lai sheds light on the reason behind the decision, citing the current U.S. regulatory and economic environment as deterrents to continue operating in the country. The exchange already announced earlier in April that it was shutting down US operations and had requested customers to withdraw their assets.
The SEC alleges that Bittrex facilitated buying and selling of crypto assets since 2014, generating over $1.3 billion in transaction fees. The tokens OMG, DASH, ALGO, Monolith (TKN), Naga (NGC), and IHT Real Estate Protocol (IHT) were all reportedly unregistered securities offerings. Bittrex, however, disputed these allegations in a statement.
For users who failed to withdraw their crypto assets by the end of April, it is now up to the Bankruptcy Court to determine how those funds can be claimed. Bittrex has assured its customers that their funds remain safe and secure, with their primary focus being to make customers whole.
This development has sparked concerns over whether Binance.US might be the next exchange to face legal scrutiny in the United States. Market participants are pointing to the widening price discrepancy between cryptocurrencies on Binance.US compared to their global counterparts as a possible indication that the platform’s market makers could be withdrawing their support.
Crypto veteran Adam Cochran suggests that Binance might soon be forced out of the US market in a CFTC settlement. He mentions the rotation from BUSD to BTC to USDT might be driving up the market to reallocate funds across different entities.
The BTC/USD pair on Binance.US currently trades at a nearly $650 premium compared to its Coinbase-listed counterpart and Binance’s BTC/USDT pair. This has led pseudonymous Twitter analyst @fewseethis to believe that the premium could be a result of market makers exiting the exchange in anticipation of regulatory action.
These events underline the uncertainty and potential risks faced by cryptocurrency exchanges, as the regulatory landscape remains in flux. While this situation may be worrying for many, it is crucial for the industry to acknowledge the need for compliance and take it into account when dealing with cryptocurrencies in a rapidly evolving market.