Bittrex U.S. Crypto Exchange Granted Permission for Customer Withdrawals After Delaware Court Ruling
In a significant development for the embattled crypto exchange, Bittrex U.S. is set to allow customer withdrawals starting Thursday, following a ruling by the Delaware bankruptcy court. Despite facing opposition from the U.S. government over outstanding sanctions violations, the exchange has received authorization to permit customers to access their cryptocurrency assets and fiat currency holdings.
Bittrex U.S., the American arm of the cryptocurrency exchange, filed for bankruptcy in May, triggering a legal battle regarding customer access to their holdings. However, the recent ruling by Judge Brendan Shannon has granted the exchange and its affiliates the right to enable withdrawals for customers with undisputed, noncontingent, and liquidated claims.
Judge Shannon’s ruling clarified that it does not determine the ownership of the assets in question or prioritize customer claims over the government’s. Moreover, it cautioned that future clawbacks may be possible, adding a layer of complexity to the situation.
Bittrex faced significant withdrawal activity after announcing plans to close its U.S. operations in March, with millions of dollars leaving the exchange. Consequently, the unit filed for bankruptcy on May 8. As of May 10, Bittrex reported holding $300 million in customer cash and cryptocurrencies within its U.S. arm. Despite the customary freeze on transactions during bankruptcy proceedings, the company argued for customers’ immediate access to their funds, aiming to avoid lengthy legal disputes.
Similar to other prominent crypto exchanges, including Binance and Coinbase, Bittrex had faced allegations from U.S. regulators regarding its operation as an unregistered securities exchange, in violation of federal law.
While the ruling brings temporary relief to Bittrex U.S. customers, the legal battle between the exchange and the U.S. government continues. The outcome of this case will significantly impact the future of the exchange and the broader cryptocurrency industry as regulatory scrutiny intensifies.
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