Bittrex’s proposal to reimburse its customers has drawn criticism from the U.S. authorities
The United States government has raised objections to a defunct cryptocurrency exchange Bittrex, plan to reimburse its consumers.
The United States government has objected to Bittrex’s plan to reimburse client monies and crypto assets after the exchange declared bankruptcy.
In early May, after allegations from authorities that it was operating an unlawful securities exchange, Bittrex’s U.S. affiliate filed for bankruptcy. After permitting users in Iran, Cuba, and Crimea to conduct unauthorised transactions, the exchange reached two settlements with the Treasury last year, totalling $53 million.
Later, the company asked the court for permission to let investors cash out without waiting and adding to the litigation cost. However, the United States government views giving priority to creditors as unethical.
Customers’ fiat currency and cryptocurrency held by Bittrex in the United States are valued at $50 million and $250 million. The group’s lawyers informed the Delaware court that its operating firm, which also filed for bankruptcy, had $120 million in cash and crypto belonging to their clients. Both firms, they said, had sufficient assets to pay out withdrawals.
The SEC brought charges against Bittrex and its former CEO, Bill Shihara, back in April, alleging that they had willfully disregarded the registration requirements of the federal securities laws. They demanded that any reference in the offering documents to crypto assets being securities be removed.
Bittrex was accused by authorities of avoiding registration and compliance with U.S. securities laws while generating at least $1.3 billion in transaction fees from investors, many of whom were based in the United States.
After the SEC repeatedly postponed a decision, Binance abandoned its proposal to purchase the assets of bankrupt cryptocurrency lender Voyager.