- Bittrex stated it would be leaving the U.S. by April 30.
- Regulatory uncertainty was cited as the primary decision to leave.
- In reality, the SEC’s crackdown on the exchange may be at the heart of the decision.
The Securities and Exchange Commission (SEC) has, in the wake of FTX’s collapse, been cracking down on crypto-based companies in the U.S. This has led to some firms standing up and fighting while others have decided to leave.
Following a decision by the SEC to sue Bittrex Inc for operating an unregistered securities exchange, the cryptocurrency exchange has filed for bankruptcy. Despite the bankruptcy filing, Bittrex was already working on leaving the U.S.
The SEC and Regulatory Uncertainty
On March 31, Bittrex announced that it would shut down its U.S. operations come April 30, following nine years of operations. The company cited the “U.S. regulatory and economic environment” as its primary reason for closing the U.S. branch.
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“It’s just not economically viable for us to continue to operate in the current U.S. regulatory and economic environment,” said Bittrex co-founder and CEO Ritchie Lai.
However, the SEC’s ‘regulation by enforcement’ approach may have played a prominent role in Bittrex’s decision at the end of March. It was reported that preceding the exit notice, the SEC served Bittrex a Wells notice intending to take legal action over the company’s alleged violations of investor-protection laws.
The SEC’s legal stand against Bittrex and this latest filing for bankruptcy will not impact Bittrex Global, which serves customers outside the United States.
Funds Still Safe?
Despite filing for bankruptcy, Bittrex’s U.S. branch has said its customers’ funds are safe and secure. The exchange said it intended to ask the bankruptcy court for a limited re-opening of customer accounts to distribute the crypto back to customers.
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Bittrex’s assets and liabilities were both between $500 million and $1 billion, according to the petition filed in a Delaware court.
The U.S. Continues Hostilities Toward Crypto
Several high-profile crypto companies have locked horns with the SEC in recent months. Coinbase, Ripple, Gemini, Paxos, and others have all faced the agency’s ire.
Coinbase is one company looking to lead a charge against the SEC; even after making suggestions, it, too, may leave the U.S. The head of Coinbase, Brian Armstrong, has been vocal against the agency and its chief, Gary Gensler.
In an interview with CNBC’s Dan Murphy on May 8, Armstrong said: “I don’t think he’s [Gensler] necessarily trying to regulate the industry as much as maybe curtail it. But he’s created some lawsuits, and I think it’s quite unhelpful for the industry in the U.S.”
On the Flipside
- The SEC and Gnesler have had relatively free reign over the crypto industry, but there are indications that they might be brought under control. On April 18, Gensler was called to testify on his ‘regulation by enforcement’ of the crypto space.
Why You Should Care
The SEC’s decision to go after crypto companies through enforcement rather than set clear guidelines is starting to have an impact. Bittrex leaving the U.S. shores may only be the beginning of a crypto exodus.
Read more about The SEC’s case against Bittrex:
Why the SEC Case Against Bittrex Is Unique in a Sea of Crypto Lawsuits.
Read more about a potential DDoS attack on Bitcoin:
