Bittrex US to open customer withdrawals tomorrow
The US branch of cryptocurrency exchange Bittrex has secured approval from a bankruptcy court in Delaware to resume customer withdrawals starting from Thursday, June 15.
The move puts customers on the verge of regaining control over their assets a week after the Justice Department opposed Bittrex’s plan to prioritize creditors who were not included in a formal plan. The US government claims that Bittrex still owes millions of dollars for violations related to sanctions.
“Bittrex US and its affiliates are permitted to allow their customers holding undisputed, noncontingent, and liquidated claims to withdraw cryptocurrency assets and fiat currency from the Debtors’ trading platform to the extent of such claims,” Judge Brendan Shannon said in a ruling on Tuesday.
One of the factors influencing Bittrex’s request to permit customer withdrawals was the status of its largest creditor, the U.S. Treasury’s Office of Foreign Assets Control (OFAC). The proposed plan would have subordinated OFAC’s claim, which amounts to over $24 million.
Bittrex filed for Chapter 11 bankruptcy protection in May, nearly four weeks after shuttering its US business following accusations made by the regulators that it was operating an unregistered securities exchange.
The Seattle-based crypto exchange said the bankruptcy filing would not impact its global brand, Bittrex Global, which is based in Liechtenstein and serves non-US customers. The filing revealed that the exchange’s assets and liabilities were in the range of $500 million to $1 billion.
Bittrex stated that the assets of its US-based users are secure and safe, and the exchange plans to request a limited re-opening of their accounts to distribute the remaining balances back to its holders. The exchange had earlier urged its US customers to withdraw their funds before April 30. The request for a limited re-opening would allow the distribution of assets to those who failed to meet the deadline.
Bittrex had reportedly 600,000 active users in the US and another 600,000 unfunded customer accounts. According to a bankruptcy filing, 16 US-based customers still have at least $1 million in their accounts, with the biggest depositor holding $14.6 million in assets.
The SEC’s complaint alleges that Bittrex was purposefully non-compliant since at least 2014, facilitating the buying and selling of crypto assets that were deemed as securities. The exchange earned over $1.3 billion in revenues, primarily from transaction fees collected between 2017 and 2022, while servicing American investors without registering any of these activities with the financial watchdog.