U.S. officials have challenged Bittrex’s proposal to allow customers to withdraw funds before the bankruptcy court approves the restructuring plan.
On May 8, the exchange filed for insolvency. According to the lawsuit, the company’s assets and liabilities range from $500 million to $1 billion. The number of creditors exceeds 100,000.
This was preceded by a series of events. In April, Bittrex announced it was winding down operations in the US, citing regulatory uncertainty. Following the US Securities and Exchange Commission (SEC) filed a lawsuit against the company in connection with violations of the law.
After filing for bankruptcy, Bittrex asked the court to allow customers to withdraw funds without the costs and expenses associated with the restructuring.
According to lawyers, the American division of the company has $50 million in fiat currency and $250 million in digital assets. The branch in Malta, also featured in the statement, has funds in the amount of $120 million. The funds at the disposal of both structures allow the full repayment of creditors’ claims, the lawyers assured.
Authorities raised a number of objections to the exchange’s proposal for a refund. Bittrex still hasn’t repaid its debt to FinCEN in the amount of $5 million. This is part of the amount of ~$30 million that the company agreed to pay in October 2022 as part of the settlement of charges of violating the US sanctions regime.
Government lawyers also pointed to the misclassification of lenders in the Bittrex proposal. They stressed that such decisions are the prerogative of the court when approving the restructuring plan.
Recall that in 2020, Bittrex tried to lure Binance users amid the problems of the latter with Roskomnadzor. In June 2022, the SEC filed a lawsuit against the largest crypto exchange, and then filed claims against Coinbase.
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