Bittrex Faces Possible Enforcement Action in Florida Despite Bankruptcy Proceedings

Despite filing for Chapter 11 bankruptcy protection in May, United States-based cryptocurrency exchange Bittrex may still face enforcement action from the Florida Office of Financial Regulation (OFR).

In a recent filing with the U.S. Bankruptcy Court for the District of Delaware, Brandon Greenberg, Assistant General Counsel at the OFR, stated that the state regulator had received information regarding Bittrex’s alleged non-compliance with Florida law. Greenberg emphasized that the OFR retains the discretionary power to initiate charges against the exchange.

Bittrex has faced multiple legal challenges in recent months. The U.S. Securities and Exchange Commission (SEC) filed a complaint against the exchange on April 17, prompting Bittrex to surrender its Florida money transmitter license on April 30. Subsequently, Bittrex filed for bankruptcy on May 8. The OFR previously indicated that Bittrex surrendering its license would not impact the ongoing prosecution of the SEC’s complaint, which included allegations of failure to segregate customer assets, failure to maintain a surety bond, and additional undisclosed complaints.

Bittrex had announced plans to wind down its U.S. operations by April due to “continued regulatory uncertainty” in the country. However, the SEC enforcement action, bankruptcy filing, and potential lawsuit in Florida have further complicated the exchange’s situation. Bittrex did allow certain users to access their accounts and withdraw funds until August 31, as announced on June 15.

It is worth noting that Bittrex Global, the global arm of the exchange, has faced fewer regulatory and financial challenges compared to its U.S. counterpart. Bittrex Global operates under regulation in Liechtenstein and Bermuda.

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