Bankrupt Crypto Exchange Bittrex.US to Enable Withdrawals

The U.S. entity of crypto exchange Bittrex is set to enable customer withdrawals on Thursday.

Bankrupt crypto exchange Bittrex.US has been authorized to let their customers withdraw crypto and fiat holdings from the trading platform.

In a Tuesday hearing, reported by CoinDesk, Judge Brendan Shannon ruled that Bittrex.US and its affiliated entities could permit their customers “holding undisputed, noncontingent, and liquidated claims” to access their holdings.

Patty Tomasco, a partner at the law firm representing the exchange, told CoinDesk that the platform would be up and running for withdrawals on June 15.

Bittrex.US held $50 million in customer cash and  $250 million in customer crypto as of May 9, when the firm filed for Chapter 11 bankruptcy protection. Although typical bankruptcy proceedings involve a freeze in transactions, Bittrex said it wanted its customers to access their funds without extended litigation. 

However, Tuesday’s ruling does not determine who legally owns the assets, meaning these funds could be subject to clawbacks in the future. This includes the U.S. government, which says it is owed millions of dollars from Bittrex for sanctions violations.

Bittrex owes the U.S. Treasury’s Department of Office of Foreign Asset Control (OFAC) $24 million pertaining to a sanctions violation settlement. The U.S. Securities and Exchange Commission (SEC) is also a part of Bittrex’s creditor list over the impending litigation costs and fines that will likely follow the lawsuit it filed against the exchange.

The SEC charged Bittrex will allegedly operating an unlicensed securities exchange, and claimed that Bittrex CEO William Shihara had coordinated with token issuers to remove problematic statements from public channels to prevent them from being flagged by regulators.