Thread by @heimdallrwa

1/ Quick thoughts on the #Bittrex bankruptcy and why we think it's more of a regulatory exit than a pure bankruptcy play.

2/ Bittrex, like many crypto exchanges onshore in the US, has both an onshore and offshore entity, with the lion's share of the biz happening offshore.

3/ The onshore entities (of not just Bittrex, but also other venues) are likely providing a larger surface area for regulatory enforcement in an environment where you are likely guilty and need to be proven innocent

4/ In fact, Bittrex already had agreed to pay US Treasury $29m last October for violating sanctions. But then the SEC charged Bittrex a few weeks ago with operating an unregistered national securities exchange, clearer, and broker!

5/ Inevitably, continuation of fines and actions would've led to a slippery-slope invitation for other enforcement agencies to join the party. So the options for Bittrex Inc were likely limited.

6/ There was the option to voluntarily shut down - which doesn't always untether you from all liabilities. But uniquely, there was also the option to file for bankruptcy. Because whatever would be re-orged in the future, must comply with the blessings of the powers that be

7/ So with this stroke of genius, by going into bankruptcy not only did Bittrex get to prime its focus on its offshore ops (which likely brings in the $), but it will also allow Bittrex Inc (whenever and however should it re-emerge), a legitimate, and unencumbered past.

8/ As such, we don't believe that creditors (depositors) will be taking deep haircuts (absent lawyer fees - because lawyers always win), because this bankruptcy is more of a regulatory exit than a business-exit. (THIS IS NOT INVESTMENT ADVICE)

9/ More importantly, and scarily, we think this will crystallize precedent of how to exit US markets for crypto companies. The lack of a proactive regulatory framework that is unable to remove redtape for innovation has fully opened the spigot on the brain drain