Bittrex Crypto Exchange, one of the largest cryptocurrency exchanges in the U.S., will end its local services following the court approval.
On October 30, 2023, Judge Brendan Shannon of the Delaware Bankruptcy Court approved Bittrex's Chapter 11 Plan of Liquidation. The approval will allow Bittrex to withdraw its business operations from the U.S. states where it previously operated, including Seattle, two locations in Malta, and its affiliated entity, Desolation Holdings LLC.
The court ruling also allows for the exchange's liquidation proposal. According to the legal document, Bittrex agreed to make certain modifications to address "informal comments from the U.S. Securities and Exchange Commission."
The court filing noted, "As stated on the record at the Hearing, the Court ruled that it would enter a revised Proposed Order (the "Revised Order"), which resolves the SEC's informal comments."
Delaware Court Approves Bittrex Liquidation Plan
Despite its shutdown in the U.S., the exchange has asserted that Bittrex Global continues to operate normally.
Bittrex announced its plan to withdraw from the U.S. market in March 2023, citing the challenging regulatory and economic environment. The exchange has been facing increasing scrutiny from the Securities and Exchange Commission (SEC), which has accused Bittrex of operating an unregistered securities exchange.
However, the exchange chose to end the lawsuit with the agency in a $ 24 million settlement without admitting or denying the allegations.
After the SEC lawsuit, Bittrex announced it would cease operations in the U.S. The cryptocurrency exchange reportedly has over 100,000 creditors and estimated debts and assets ranging from $500 million to $1 billion, according to court filings shared by Randall Reese of Chapter 11 Dockets, a bankruptcy tracking company.
Bittrex reported an outflow of $423 million in April after announcing its shutdown, followed by an additional exit of $143 million during bankruptcy proceedings. Some users left the exchange, unwilling to go through the bankruptcy process.
Bittrex faced another lawsuit in July from the Florida Office of Financial Regulation (OFR), alleging multiple state law violations. However, the OFR's lawsuit was filed after Bittrex filed for bankruptcy protection, so creditors can't sue or take action against Bittrex's assets.
Founded in 2014, Bittrex is one of the most established crypto exchanges in the U.S. The exchange's market share reached 23% in early 2018. However, its glorious days in the country are set to come to an end soon.
More Crypto Exchanges May Leave The U.S.
The lack of regulatory clarity makes it difficult for exchanges to comply with all the rules, leading to uncertainty and legal risks. Under ongoing regulatory pressure and uncertainty, many crypto exchanges have considered exiting the powerhouse.
Coinbase CEO Brian Armstrong previously said that the company is considering leaving the US if regulatory clarity does not improve. He added that the U.S. government's approach to cryptocurrency regulation can stifle innovation and ultimately limit the development of new products and services in the crypto space.
In October, Coinbase announced the launch of a perpetual trading service for advanced customers outside the U.S., amid the lawsuit between Coinbase and the SEC. The SEC has accused Coinbase of operating an unregistered securities exchange and selling unregistered securities through its perpetual trading service.
Another industry figure, Gemini CEO Tyler Winklevoss, stated that the company is open to exploring other jurisdictions if the U.S. regulatory environment becomes too hostile. Crypto is global, and it is growing in popularity. So if the U.S. wants other nations to have the industry, it should keep going in the same direction.
Bittrex's departure from the U.S. market will likely lead to a decrease in competition in the US cryptocurrency market, which could benefit existing exchanges. However, it could also make it more difficult for U.S. investors to access cryptocurrency exchanges. If other major exchanges follow suit, U.S. investors might be left with few trusted options.
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