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- The U.S. government objects to a proposal laid out by Bittrex for customer reimbursement.
- The objection alleges Bittrex owes millions of dollars in fines for sanction violations.
- Bittrex filed for bankruptcy on May 8 after the SEC accused it of running an unlawful exchange.
The U.S. has lodged a legal challenge against a proposal made by bankrupt crypto exchange Bittrex for the return of customer funds and cryptocurrencies. The U.S. government claims that it is still owed millions of dollars by Bittrex for violations related to sanctions. This challenge was revealed in a court filing on Wednesday.
Siloing creditors into subordinated classes outside of the confirmation hearing is improper.” “The Bittrex companies “have not demonstrated why the issues of ownership of cryptocurrency assets needs to be determined prior to the confirmation of the [bankruptcy] plan.
What happened to Bittrex?
Bittrex has filed for bankruptcy protection following accusations by the SEC of operating an unregistered securities exchange. The exchange ceased its operations in the United States on April 30, but clarified that the bankruptcy filing would not affect the services provided by Bittrex Global, which operates outside the United States from Liechtenstein.
According to the bankruptcy petition filed in a Delaware court, Bittrex reported assets and liabilities ranging between $500 million and $1 billion.
The SEC filed a lawsuit against Bittrex on April 17, alleging that former CEO William Shihara encouraged crypto asset issuers to delete from public channels statements that might attract regulatory scrutiny as securities. Bittrex’s U.S. branch holds $50 million in customer cash and $250 million in customer crypto, while the Maltese operating company, which also filed for bankruptcy, possesses $120 million in customer cash and crypto. Both entities have sufficient assets to fulfill customer withdrawal requests, according to the statement from the lawyers.
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