Bittrex Inc., the US arm of the crypto exchange Bittrex Global, has sent a reminder email to its users on the need to withdraw their funds “as soon as possible.” Although the deadline for withdrawal of funds remains August 31, the crypto exchange has urged users to do it soon to give their team “sufficient time to resolve any unforeseen issues.”
“Bittrex Inc. has been granted permission by the United States Bankruptcy Court to allow customers who meet the necessary regulatory requirements to access their accounts and withdraw any remaining assets.” the email read.
How It All Went Down For Bittrex
On March 31, 2023, Bittrex announced on its Twitter platform that it was winding down its US operations due to the “continued regulatory uncertainty.”
The tweet read:
Due to continued regulatory uncertainty, we have made the difficult decision to wind down our U.S. operations, effective April 30, 2023. All funds are safe and can be fully withdrawn immediately.
However, the exchange’s woes were just starting as on April 17, 2023, the United States Securities and Exchange Commission (SEC) charged the crypto exchange for violating securities laws, including trading unregistered securities on its platform. This had caused many to believe that the impending SEC charges may have caused the crypto exchange to announce it was winding back in March.
This belief may not be far from the truth as Bittrex released a statement on its Twitter platform following the SEC’s charges.
Bittrex said in its statement:
We are disappointed with the SEC’s decision to bring an enforcement action against Bittrex as part of Chairman Gensler’s larger crusade to drive cryptocurrency out of the United States. The impact of the SEC’s approach of regulation by enforcement will have a chilling effect on not just cryptocurrency in the United States, but on blockchain technology and innovation in general.
The impact of this regulatory action was significant for the exchange and on May 8, 2023, Bittrex filed for Chapter 11 bankruptcy protection. This came following the SEC’s clampdown on the trading platform. Its filings also suggested that the firm was in deep financial woes as it stated that it had more than 100,000 creditors.
Bittrex’s Approach Is Commendable
Unlike what was seen with FTX and other crypto platforms that experienced ‘free fall’ bankruptcy, Bittrex’s case is quite different. From all indications, the company was fully prepared for the moments leading up to its bankruptcy filing.
According to Patterson Belknap Webb & Tyler LLP, Bittrex had taken “extensive action pre-petition to ensure full customer recovery, and plan to swiftly bring these chapter 11 cases to a responsible conclusion.”
These actions include the ‘winding up’ announcement on March 31, which was going to become effective on April 30, halting deposits (without halting withdrawals), and giving customers enough time to withdraw their funds.
Even at the time of filing, Bittrex continued to reiterate the fact that customers’ assets were safe and would be returned. This customer-first approach by Bittrex is commendable, considering how customers of different crypto platforms remain in limbo as to when (or if ever) they will regain their funds.
It is also worth mentioning that Bittrex went as far as obtaining a $7 million loan in Bitcoin (BTC) from its parent company, Aquila Holdings, to pay back its customers, according to a Reuters report on May 10.