Can a crypto exchange go bankrupt?

And while you can keep your assets secure by setting up a crypto wallet through your exchange or using an external wallet in many cases, your cryptocurrencies may not be protected against events like bankruptcy. What happens when a crypto exchange goes bankrupt?

Is Bittrex going bankrupt?

On May 8, 2023, crypto exchange Bittrex announced that it was filing bankruptcy. This is the most recent crypto platform to file, but crypto companies FTX, Voyager, BlockFi, and Celcius also all filed for bankruptcy in 2022.

How do cryptocurrencies protect you from bankruptcies?

Ironically, cryptocurrencies were created to protect you against bankruptcies (see the 2008 banking crisis ), not join their lists of victims. One of the best ways to protect your assets is to use a self-custody wallet that you control, which reduces the risk of losing your assets in the event of an exchange hack or bankruptcy.

Can a bankruptcy trustee recover a crypto asset?

If it's classified as a commodity, the trustee in charge of the bankruptcy can recover the cryptocurrency's value at the time it was transferred, plus any increase in value since then. But if it's treated like currency, the trustee can only recover the crypto asset's value at the time of the transfer.