Rahman Ravelli
Rahman Ravelli Solicitors Logo
Switchboard: +44 (0)203 947 1539

About Us Expertise PEOPLE International Legal Articles News Events Contact Us toggle button for phone toggle button for search

Bittrex, Bankruptcy and Crypto Safety

Author: Syedur Rahman  15 May 2023
3 min read

Syed Rahman, cryptocurrency specialist at Rahman Ravelli, considers the issues raised by the exchange’s difficulties.

Even allowing for the rapidly-changing nature of the cryptocurrency world, Bittrex’s filing for bankruptcy appeared to be a sudden development at odds with the crypto exchange’s previous stance.

While the majority of us will have to wait for all the details to emerge, what we do know is that Bittrex’s filing for bankruptcy came just weeks after the exchange and its co-founder and former CEO William Shihara were charged by the US Securities and Exchange Commission (SEC) with operating an unregistered national securities exchange, broker and clearing agency. The SEC also charged Bittrex’s foreign affiliate, Bittrex Global GmbH, with failing to register as a national securities exchange in connection with it operating a single shared order book with Bittrex.

Bittrex had announced it would be shutting down its US operations from April 30th. The exchange said it had come to its decision because it was not viable to continue its operations given the current regulatory and economic environment in the US. Yet quite when the decision was made to file for Chapter 11 bankruptcy protection in a federal court in Delaware is something that only those at the top of Bittrex will know right now.

According to the bankruptcy filing, Bittrex believed it had more than 100,000 creditors, with estimated liabilities and assets both within the $500 million to $1 billion range.

In a statement, the company said: "For those customers who did not withdraw their funds from the platform prior to the end of April, your funds remain safe and secure, and our main priority is to ensure that our customers are made whole."

Bittrex also made it clear that the filing for bankruptcy did not affect Liechtenstein-based Bittrex Global, which was to continue providing services for its customers who are not in the US. Yet the bankruptcy filing did include its Seattle-based entity Bittrex Inc, two Bittrex entities based in Malta, and an affiliated entity, Desolation Holdings LLC. 


Taken in isolation, this is a situation that is alarming for anyone who has assets in Bittrex. And from the details that were made public, there are a lot of those assets. Even though Bittrex had stated it was planning to close its US operations, it would be a surprise if many people ever expected their assets to be tied up in a Chapter 11 filing.

Yet looked at from a broader perspective, the plight of Bittrex is far from unique. It joins the likes of FTX, BlockFi, Celsius and Voyager as crypto firms that have filed for bankruptcy over the past 12 months. FTX was certainly the headline grabber, having filed for bankruptcy with a $9 billion deficit in November 2022. Yet two months later, Genesis – the crypto lending subsidiary of no less than the giant Digital Currency Group – filed for bankruptcy, owing $3.4 billion. Some of Genesis’ assets (admittedly, not a huge amount) were in FTX. Genesis also reported what was termed a significant loan loss with another party, which was later revealed to be the crypto hedge fund Three Arrows Capital. Three Arrows had itself filed for bankruptcy last July, owing $3.5 billion, of which just $40 million had been recovered eight months later.

The figures are eye-watering, and the series of financial collapses shows no sign of abating. The crypto world continues to be vulnerable to the poetically-named black swan events – an elegant phrase used in financial circles to describe unpredictable events with potentially severe consequences. The question is what, if anything, can be done to prevent more black swans descending on the already fraught cryptocurrency world?


Cryptocurrency has always been recognised as being unpredictable. For some, that has been its attraction. Yet this has – on some occasions, at least – led to even the smartest crypto minds losing on a large scale. Sometimes, this has been down to fraud or mismanagement by those running the firms. But in others, this unpredictability has done the damage all on its own.

It can be argued that regulation will help make crypto safer. We know that the UK aims to be the global hub for crypto and regulation may well play a large part in this. The UK government’s recent announcements have been suggesting the need for what has been called robust regulation in order to provide confidence and clarity for consumers and businesses. It believes it will be capable of both reducing the risks of crypto and taking full advantage of its potential benefits. The aim is to improve consumers' understanding of the risks associated with cryptoasset investments and ensure that such investments are held to the same standards as other financial services.

But regardless of what may or may not happen regarding regulation, awareness will always be key to taking the safest approach to crypto. That can mean looking at all aspects of the crypto sector. But on a more one-to-one level it can mean checking the authenticity of claims about guaranteed returns on investment, resisting pressure tactics from brokers or investment platforms and not being seduced by advertisements and endorsements from celebrities who are rarely familiar with the industry themselves.

Crypto may still be the new kid on the block when it comes to investment. But the two golden rules to investment still apply: if you don’t understand it don’t invest and if it seems too good to be true, it probably is.

Syedur Rahman C 09551

Syedur Rahman


+44 (0)203 910 4566 vCard

Download Profile PDF

View Profile

Syedur Rahman is known for his in-depth experience of serious fraud, white-collar crime and serious crime cases, as well as his expertise in worldwide asset tracing and recovery, international arbitration, civil recovery, cryptocurrency and high-stakes commercial disputes.

Share this page on