US Bankruptcy Court Approves Crypto Exchange Bittrex's Shut Down

Crypto exchange Bittrex received the green light from the US bankruptcy court yesterday (Monday) to shutter its US operations. The Judge also approved the exchange's liquidation plan to repay its remaining creditors.

Bittrex Shuts in the US

Bittrex filed for bankruptcy protection in May after the US Securities and Exchange Commission brought charges against the exchange for operating an unregistered securities exchange. Instead of contesting the regulator, Bittrex resolved the charges by agreeing to pay a monetary penalty of $24 million in August and opted to withdraw from the US market.

Unlike most bankrupt crypto exchanges, Bittrex's decision was voluntary. The exchange additionally highlighted that its bankruptcy in the US will not impact global operations. The bankruptcy covered Seattle-based entity Bittrex, Inc., two Bittrex entities in Malta, and an affiliated entity, Desolation Holdings LLC. Its Liechtenstein-based entity, Bittrex Global GmbH, under which non-US services are offered, is not included in the bankruptcy proceedings.

The exchange committed to returning all the customer assets in full. It further urged customers to withdraw their funds before formally filing for bankruptcy.

Customers Getting Back Their Money

The exchange is estimated to have a surplus after the completion of the customer withdrawal. It has some long-inactive accounts where customers could not be reached and some other small accounts that the customers abandoned.

According to the exchange, Bittrex customers withdrew roughly $423 million in crypto assets in April after its shutdown announcement. Further, about 36,000 customers withdrew approximately $143 million in crypto during the bankruptcy proceedings, Bittrex's attorney Patricia Tomasco revealed in court.

More than three-quarters of the remaining customers have less than $100 worth of assets in their accounts, and some of them made a "calculated" decision to abandon these assets rather than go through the bankruptcy process.

"The sentiment is, I don't want to give you all that information to get $35," the attorney said. However, it is unclear how the exchange will utilize these proceedings.

According to a previous report by Finance Magnates, the US Treasury's Office of Foreign Assets Control emerged as the largest creditor of Bittrex with a claim of $24.2 million. Additionally, the Financial Crimes Enforcement Network had a claim of $3.5 million, and a crypto wallet held a claim of $14.5 million.