UpdatesJun 16, 2023

Bankrupt cryptocurrency exchange Bittrex resumes withdrawals of funds to affected investors

Following a ruling by a Delaware judiciary, the U.S. branch of cryptocurrency exchange Bittrex is set to open for withdrawals to former customers.

A Delaware bankruptcy court issued a ruling last Tuesday that will allow collapsed digital currency platform Bittrex to open payouts to affected customers starting Thursday (June 15 this year). The aforementioned cryptocurrency exchange announced the loss of financial liquidity and, as a consequence, bankruptcy in May 2023, it is worth adding that the US government did not allow its clients to withdraw at risk funds due to the fact that it stated that the failing platform owes it millions of dollars for violation federal law.

Bittrex resumes withdrawal of funds to investors after court verdict

In a ruling issued on June 12, 2023, Judge Brendan Shannon authorized Bittrex's US division, Bittrex.US and its affiliates, to allow their clients to withdraw funds. It is worth adding here that this option has been made available only to injured customers with undisputed, unconditional and liquidated claims to withdraw cryptocurrency funds and fiat currencies from the collapsed digital currency platform.

An important circumstance that accompanies this case is that the judgment does not specify in any way who is the legal owner of the above-mentioned assets. Moreover, the said court judgment also does not specify whether the claims of customers are in any way preferential in relation to the claims of the government against this platform.

The digital currency platform Bittrex handled a large number of withdrawals already at the stage of April this year, when it announced that it was definitely ending its operations in the US. Less than a month later, at the beginning of May 2023, it filed for bankruptcy. Despite this, a significant number of its US customers have not yet been able to successfully withdraw funds. As of May 10, 2023, the company made public that it has $300 million in cash and digital currencies of its clients stored in its American branch.

It is worth emphasizing here that bankruptcy proceedings in the United States usually involve a complete freezing of funds. However, the people who manage this cryptocurrency platform wanted its investors to be able to freely withdraw their funds regardless of the lengthy court proceedings.

Like platforms such as Binance and Coinbase, Bittrex has been accused by the US Securities and Exchange Commission (SEC) of violating federal law by operating a trading platform where unregistered securities in the form of digital currencies were offered.