Bankrupt crypto exchange Bittrex is under turmoil as a legal dispute has arisen between the U.S government and Bittrex, over the exchange’s proposal to return customer funds, including both cash and cryptocurrencies. According to a court filing on Wednesday, Bittrex owes them millions for violations related to sanctions.
Crypto exchange Bittrex’s customer-repayment plan faces U.S. government objection
— unfolded. (@cryptounfolded) June 8, 2023
The US regulators found Bittrex operating illegally hence the exchange was sued for this reason and Bittrex US filed for bankruptcy on May 8. After this incident, Bittrex agreed on a settlement with the Treasury for $30 million to continue business for the customers of Cuba, Crimea and Iran.
Government has Strong Plans
The company requested court approval to allow customers to withdraw their assets without going through the costly and time-consuming process of litigation. The U.S. government, which is owed $5 million by the Financial Crimes Enforcement Network (FinCEN), argues that it is unfair to give them more important treatment over others.
The government has also given a strong statement with regard to the bankruptcy plan. According to the government, it’s wrong to separate creditors into lower classes before the confirmation hearing. The government says that Bittrex hasn’t given enough reasons to help them decide who owns the cryptocurrency assets before confirming the plan for bankruptcy.
Lawyers: Bittrex has Enough Funds to Repay Customers
Bittrex lawyers say that the company has enough assets to fulfill customers withdrawal as the company’s portfolio is quite strong. The exchange has disclosed that the US arm of Bittrex has $50 million in customer cash and $250 million in customer cryptocurrency. In total it has $120 million in customer cash and cryptocurrency. The government has stopped crypto bankruptcies before, Binance wanted to buy Voyager, a failed crypto lender, but the Securities and Exchange Commission (SEC) caused delays.
This time also, the government may intervene Bittrex’s plans and make their journey difficult. The hearing for Bittrex’s bankruptcy plan is set to take place on June 14th.
