Categories: News

Bittrex Is Not Allowed To Refund Clients’ Cash And Crypto

Key Points:

  • Bittrex’s proposal to refund customers’ cash and cryptocurrencies faces opposition from the US government.
  • The FinCEN argued that it would be inappropriate to classify creditors into subcategories outside of confirmation hearings.
  • The exchange did not demonstrate why it was necessary to determine the ownership of the crypto assets before confirming the bankruptcy plan.
According to a court filing, the US government is opposing a petition by the insolvent encrypted exchange Bittrex to restore clients’ cash and cryptocurrencies.
Bittrex Is Not Allowed To Refund Clients' Cash And Crypto 4

The company’s U.S. subsidiary declared bankruptcy on May 8 after authorities accused it of running an unlawful stock exchange, and after striking a $30 million deal with the Treasury Department, it permitted Iran, Cuba, and Crimea to conduct business with Asia’s clients.

But, the US government’s Financial Crimes Enforcement Network (FinCEN) contended that classifying creditors into subcategories outside of confirmation hearings would be improper, according to the government document. Bittrex could not explain why determining ownership of crypto assets was required prior to certifying the bankruptcy plan was essential.

Bittrex Is Not Allowed To Refund Clients' Cash And Crypto 5

According to reports, Bittrex’s US office has $50 million in client cash and $250 million in customer cryptocurrencies. Previously, lawyers for the firm informed a Delaware court that the Malta-based company, which also filed for bankruptcy, had $120 million in customer cash and cryptocurrency and enough assets in both to satisfy withdrawals. On June 14, a hearing will be held to discuss Bittrex’s proposal to enable withdrawals.

Bittrex filed for bankruptcy in Delaware, USA, on May 8. This will have no impact on Bittrex Global’s operations, and the exchange will continue to offer services to clients outside of the United States.

Bittrex Is Not Allowed To Refund Clients' Cash And Crypto 6

According to a court filing released by bankruptcy tracker Chapter 11 Dockets, the exchange has over 100,000 creditors with estimated obligations and assets ranging from $500 million to $1 billion.

Bittrex’s US subsidiary laid off 80 employees in February and stated in March that it would shut all operations by the end of April. The Securities and Exchange Commission (SEC) of the United States launched a complaint against Bittrex and its CEO in mid-April, accusing them of running a national stock exchange, brokerage, and clearinghouse without registration.

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Harold

Coincu News

Harold

With a passion for untangling the complexities of the financial world, I've spent over four years in financial journalism, covering everything from traditional equities to the cutting edge of venture capital. "The financial markets are a fascinating puzzle," I often say, "and I love helping people make sense of them." That's what drives me to bring clear and insightful financial journalism to the readers of Coincu.

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