Bittrex Faces Possible Enforcement Action in Florida Amid Bankruptcy

6:01 pm
July 6, 2023
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The Florida Office of Financial Regulation (OFR) is considering taking action against Bittrex, a U.S.-based cryptocurrency exchange that filed for Chapter 11 bankruptcy protection in May. The OFR has been provided with information regarding Bittrex’s alleged failure to comply with Florida law, and it retains the discretion to decide whether or not to charge the exchange.

In a filing with the U.S. Bankruptcy Court for the District of Delaware on July 5, Brandon Greenberg, assistant general counsel for the OFR, stated that the regulator had received information suggesting Bittrex’s non-compliance. Greenberg clarified that the OFR still had the authority to pursue charges against Bittrex.

The U.S. Securities and Exchange Commission (SEC) had previously filed a complaint against Bittrex on April 17, and the exchange voluntarily surrendered its Florida money transmitter license on April 30. On May 8, Bittrex filed for bankruptcy. At the time, the OFR expressed its commitment to prosecuting the SEC’s complaint, which included allegations that Bittrex had failed to segregate customer assets from its operating capital and lacked a sufficient surety bond.

The SEC enforcement action, bankruptcy case, and potential lawsuit in Florida followed Bittrex’s decision to wind down its operations in the United States by April due to ongoing regulatory uncertainty. The exchange later announced that certain users could access their accounts and withdraw funds until August 31. Meanwhile, Bittrex Global, the exchange’s international counterpart regulated in Liechtenstein and Bermuda, has not experienced significant regulatory or financial difficulties.

Summary

The Florida Office of Financial Regulation is considering potential action against Bittrex, a U.S.-based cryptocurrency exchange that recently filed for bankruptcy. The regulator has obtained information suggesting that Bittrex failed to comply with Florida law, and it has the authority to decide whether or not to charge the exchange. This development adds to the ongoing enforcement action by the U.S. SEC and Bittrex’s voluntary surrender of its money transmitter license in Florida.

FAQs

1. Why is the Florida Office of Financial Regulation considering action against Bittrex?

The Florida Office of Financial Regulation is considering action against Bittrex because it has received information indicating that the exchange failed to comply with Florida law. The office retains the discretion to decide whether to charge Bittrex or not.

2. What were the allegations made by the U.S. Securities and Exchange Commission against Bittrex?

The U.S. SEC filed a complaint against Bittrex, accusing the exchange of various violations. The allegations included failure to segregate customer assets, failure to maintain a sufficient surety bond, and additional undisclosed complaints.

3. What led to Bittrex filing for bankruptcy?

Bittrex decided to file for bankruptcy due to ongoing regulatory uncertainty in the United States. The exchange had previously announced the wind down of its operations in the country before initiating the bankruptcy filing.

4. Is Bittrex’s international counterpart, Bittrex Global, affected by these regulatory and financial issues?

No, Bittrex Global, the international counterpart of Bittrex, has not encountered significant regulatory or financial difficulties. The global exchange is regulated in Liechtenstein and Bermuda.


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