Latest news in the last hours for the crypto exchange Bittrex US, which filed for bankruptcy in May and has now been given permission to allow withdrawals for customers starting Thursday.
Let’s look in detail at what is happening.
Summary
Delaware court authorizes Bittrex US to allow withdrawals for customers
As anticipated, crypto exchange Bittrex, in its US division, will be able to allow customer withdrawals starting Thursday, following a ruling issued by a Delaware bankruptcy court, according to a report to CoinDesk.Â
As we know, the exchange filed for bankruptcy in May and faced opposition from the US government regarding its legal request to allow customers to access their assets again.
This was because the government claimed that Bittrex still owed millions of dollars due to alleged sanctions violations.
However, in the ruling issued Tuesday, Judge Brendan Shannon authorized Bittrex US and its affiliates to allow customers, who have uncontested, non-contingent and settled claims, to withdraw cryptocurrencies and fiat currency from the debtors’ trading platform, up to the amount of their claims.Â
The ruling does not announce who legally holds these assets, nor whether the clients’ claims take priority over those of the government. The ruling also added that there may be further developments in the future regarding possible recoveries.
Patty Tomasco, a partner at the Quinn Emmanuel law firm representing Bittrex, told CoinDesk via email that “the platform will be operational for withdrawals starting from Thursday 15 June.”
As we know, the exchange recorded withdrawals in the millions of dollars after announcing in March that it would shut down operations in the United States in the following month. The unit then filed for bankruptcy on 8 May.
As of 10 May, Bittrex said it held $300 million in cash and customer cryptocurrencies in its US division.
Although bankruptcy proceedings usually result in a freeze on transactions, the company said it wanted to allow customers to access their funds without having to go through lengthy legal battles.
The bankruptcy filing of the crypto exchange Bittrex: the details
As anticipated, crypto exchange Bittrex filed for bankruptcy in the US state of Delaware on 8 May, after months of announcements about shutting down operations in the country and weeks after being sued by the Securities and Exchange Commission (SEC).
According to a court statement at the time, shared by Randall Reese of Chapter 11 Dockets, a bankruptcy tracker, the exchange estimated it had more than 100,000 creditors, with liabilities and assets ranging from $500 million to $1 billion.
Bittrex’s US subsidiary faced a number of challenges during 2023, with the layoff of 80 employees in February and the announcement in March that it would close all operations by the end of April.
These changes did not involve Bittrex Global, the cryptocurrency exchange that operates outside the United States.
Despite Bittrex’s imminent exit from the US market, the SEC sued the exchange in mid-April, accusing it of operating as a national securities exchange, broker and clearing agency.
The SEC also subpoenaed Bittrex’s former CEO Bill Shihara and Bittrex Global. Bittrex Global CEO Oliver Linch said a few months ago that the exchange intends to defend itself against these charges in court, but a bankruptcy trial could make the situation more complicated.
Evan Hengel, Co-Chief Restructuring Officer of the Bittrex company, said the following on the matter:
“The company faced an unsustainable regulatory and economic environment given the lack of regulatory clarity in the US which created a substantial negative economic impact on the digital assets industry and resulted in overlapping regulatory burdens and rising regulatory costs.”
Withdrawals amounting to millions of dollars recorded by Bittrex after operations were declared closed
Bittrex has processed withdrawals totaling $425 million from its US and Maltese subsidiaries since announcing the closure of operations in the United States around 1 April, according to its lawyer during a hearing a few months ago in a Delaware bankruptcy court.
Attorney Susheel Kirpalani, representing Bittrex, said the company has not engaged in any misconduct like some other players in the cryptocurrency industry and may have suffered financial hardship as a result of such circumstances.
“Bittrex has not mortgaged, loaned or risked any of its customers’ deposits. As a result, it also struggles to generate revenue, particularly if the regulatory environment it operates in limits or begins to challenge the ability to allow trading.”
Bittrex’s lawyer, from the law firm Quinn Emanuel Urquhart & Sullivan, also cited real estate assets consisting of more than $3 million in cash and cryptocurrencies at the company.
He added that the company had an average value of assets under management of only $566 million in 2023, down sharply from $2.7 billion in 2021.
