Bitrabo Editorial
On June 15, customers of the United States division of the bankrupt cryptocurrency exchange Bittrex will be able to withdraw their assets, following a court ruling by a Delaware bankruptcy court.
The exchange had filed for bankruptcy in May, but the United States Justice Department had opposed Bittrex’s efforts to restore customer access to their assets. The opposition was due to millions in unpaid penalties for sanctions breaches.
Bittrex Withdrawals Unlocked
A Delaware bankruptcy court has issued an order by Judge Brendan Shannon allowing the US division of Bittrex to begin facilitating customer withdrawals.
The order was issued in response to a motion filed by Bittrex’s debtors in possession. It permits customers with “undisputed, noncontingent, and liquidated claims” to withdraw their cryptocurrency assets and fiat currency from the platform as specified in their claims.
The court order enables Bittrex to take all necessary actions to implement the relief granted in the order. However, it does not resolve any ownership or priority disputes between the exchange, its customers, or other creditors, including the United States government.
Additionally, the order does not set a precedent for any other bankruptcy cases that involve cryptocurrency assets or transactions.
Furthermore, the order emphasizes that it should not be interpreted as a finding under federal securities laws regarding whether crypto assets or transactions involving crypto assets are securities.
This clarification is significant because securities laws govern the issuance, sale, and trading of securities in the United States. If cryptocurrency assets or transactions involving cryptocurrency assets were considered securities, they would be subject to securities laws and regulations. Such categorization could have significant implications for the bankrupt cryptocurrency exchange and its customers.
By stating that the order should not be construed as a finding under federal securities laws, the court is essentially saying that it is not deciding on whether or not cryptocurrency assets or transactions involving cryptocurrency assets are securities.
Bitcoin continues with its sideways price action on the 1-day chart. Source: BTCUSDT on TradingView.com
Instead, the court is simply allowing Bittrex to facilitate customer withdrawals, without making any determination on the legal status of cryptocurrency assets under federal securities laws.
On April 17th, the US Securities and Exchange Commission (SEC) charged Bittrex and its former CEO, William Shihara, for operating an unregistered national securities exchange, broker, and clearing agency.
The SEC also charged Bittrex Global GmbH, a foreign affiliate of the platform, for failing to register as a national securities exchange in connection with its operation of a single shared order book along with Bittrex.
According to the SEC’s complaint, Bittrex presented itself as a platform that facilitated the buying and selling of crypto assets that the SEC alleges were offered and sold as securities since at least 2014.
From 2017 through 2022, Bittrex purportedly generated revenue of at least $1.3 billion from transaction fees, among other sources, while serving investors, including US investors, as a broker, exchange, and clearing agency without registering any of these activities with the SEC.
Featured image from Unsplash, chart from TradingView.com