I assume that most people have never heard of Bittrex, not even those who are crypto enthusiasts. CoinMarketCap ranks it as the 51st-most active exchange based on trading volume. This data may explain at least in part why the U.S. division of the company filed for bankruptcy protection Monday.

Bittrex is likely to be higher on this list than it was in the past few months as people rush to sell off any tokens or bitcoin dust that they have left. Some people may have a fond memory of their exchange, but only a small number of them. They entered the crypto world during the initial coin offerings (ICOs) boom that began in mid-2017. It ended a few weeks later in early 2018.

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The crypto class of 2017, which I am a member of, was treated in many ways. The industry has a lot of infrastructure that was in place before the token mania. Unlike early bitcoin adopters, who had to physically meet to exchange their coins before cryptocurrency exchanges were invented, or saps who had only “enterprise Blockchain” to be excited about. Coinbase made it easy for me to buy my first fractional bitcoin with a credit card. When I wanted to throw around sh*tcoins I logged in to Bittrex (that’s before the exchange geo-blocked the State of New York).

Exchanges like Bittrex have played a significant role in the history of crypto. I am glad that on-chain options such as Uniswap are available today. They allow users to list and trade tokens without sacrificing their custody or requiring any intervention. Binance was one of these exchanges and grew into one of most valuable crypto companies in history.

Although the concept of centralized exchanges is fraught with danger – as intermediaries for what should be an unmediated financial system – they play a vital role in bridging the gap between fiat and cryptocurrency. Bittrex, or at least the US version, was one of the few exchanges that ICO traders trusted. It was able to list tokens quicker than other platforms (at the time), such as Coinbase, and offshore companies, like Binance.

Bittrex is in a difficult position today, due to the market reality and regulatory environment. Decentralized finance (DeFi), which is a form of decentralized financing, has become more accessible. Centralized exchanges with limited liquidity and tokens but stricter KYC protocols have become increasingly irrelevant. Do not call me bitter because I forgot my 20,000 FUN tokens when the exchange had to leave New York State (the funds were “irrecoverable”). In a CoinDesk interview, a Bittrex executive cited “untenable economic and regulatory environment” as the reason for the exchange’s decision to first withdraw from the U.S. and then to seek Chapter 11 protection.

Bittrex is a symbol of the “sh*tcoin” era, a time that few fondly remember. There are many “traders,” who lost a lot of money on “investments,” like FUN (which was meant to power a casino blockchain), who have left crypto completely or are hard-nosed bitcoiners. However, there are also many who would appreciate the crash course that day trading offered in finance and economy. I learned my lesson. The industry has grown since then, even though crypto appears to be stuck in endless cycles of irrational exuberance. The sudden closure of exchanges or the forced geo-blocking of users left a lasting impression on the importance of self custody.


The exchange business is facing a reckoning. Under Chairman Gary Gensler’s leadership, the U.S. Securities and Exchange Commission has determined that all crypto currencies, except bitcoin, are securities and therefore, crypto exchanges must be licensed as securities brokers. Even exchanges that are supposedly friendly to regulation, like Coinbase, have resisted these claims. In an open message to the SEC Blockchain Association lobbyists said that a recent proposal to amend the SEC custody rule would choke the industry. A16z, a major VC, responded to the SEC’s proposal by saying that the SEC was “waging a war” on cryptocurrency.

Bittrex has certainly suffered from regulatory uncertainty to some degree. It seems that the crypto industry spends more time defending bucket stores than it does coming to an agreement. SEC is often criticized for “regulating through enforcement” and it does regulate this industry more than others. But this is because the agency has a primary responsibility to set a standard for disclosures, so that investors can compete on an even playing field. On-chain KYC can be dangerous because the blockchain destroys privacy. Many tokens are not just investment contracts. There is no uncertainty about regulation in the U.S., but private companies prefer to deal under the guise of corporate secrecy.


Bittrex’s suit against the SEC is still unclear. The SEC accused Bittrex of listing six cryptocurrencies as securities – DASH ALGO OMG TKN NGC IHT – a claim that some crypto lawyers feared would set a dangerous precedent. Things could have been worse considering what happened on Bittrex. The exchange stated that its global operations will continue to operate with a Liechtenstein-based headquarters and its 100,000 U.S. creditor will be paid after bankruptcy, including its biggest benefactor the U.S. Treasury Office of Foreign Asset Control. All I can say is that I had a lot of fun.