Bittrex Files for Bankruptcy, Funds Legal Fees with Bitcoin Loans
• Bittrex has kicked off bankruptcy proceedings and is receiving funding in two tranches from its parent company Aquila Holdings.
• The court granted the exchange permission to take a loan of 250 BTC worth about $6.86 million at current rates.
• Bittrex cited difficult regulatory and economic conditions as the main cause for its decision to file for bankruptcy in the United States.
Bittrex Files for Bankruptcy
Bittrex’s United States arm filed for bankruptcy in federal court in Delaware on Monday, May 8, after a challenging year that saw it lay off over 80 employees in February. The crypto exchange’s decision to go through with the filing came weeks after receiving a lawsuit from the U.S. Securities and Exchange Commission (SEC) for allegedly violating investor protections law by failing to register as a securities exchange, even despite its intentions to shut down its business at the end of April.
Funding Legal Fees with Bitcoin Loans
Reports reveal that Bittrex plans to cover legal fees associated with bankruptcy proceedings with Bitcoin loans from its parent company Aquila Holdings. The firm will receive 700 BTC, worth about $19.2 million at the time of writing, split into two tranches of 250 BTC and 450 BTC respectively. U.S. Bankruptcy Judge Brendan Shannon permitted the first loan after noting Bitcoin’s low interest rate and volatility protections. Bittrex intends to repay the loan in Bitcoin itself once funds are available during bankruptcy proceedings going forward
Customer Deposits Intact
Bittrex has assured customers that deposits remain intact and that enabling withdrawals would be prioritized during bankruptcy proceedings despite their unfortunate circumstances due to recent events.
Regulatory Environment Cited as Factor
The crypto exchange notably tipped difficult regulatory and economic conditions as one of the primary factors contributing towards its decision to leave the U.S., citing “overlapping regulatory burdens” among other factors as an added weight on digital asset businesses operating within America’s borders
Conclusion
While many have sympathized with Bittrex following its Chapter 11 filing, some have questioned U.S.-based crypto regulations while others have praised their decision to fund legal fees through Bitcoin loans instead of more traditional methods such as cash or credit cards
