Crypto

Bittrex Faced Florida Regulator Enforcement Action Prior to Bankruptcy

The Florida Office of Financial Regulation indicated in a bankruptcy court filing that the regulator still had “administrative discretion” to prosecute Bittrex. The Florida Office of Financial Regulation is considering legal action against Bittrex, a cryptocurrency exchange based in the United States that filed for Chapter 11 bankruptcy in May.

The filing was made by Brandon Greenberg, assistant general counsel for the Florida Office of Financial Regulation (OFR), in opposition to Bittrex Inc.’s request for an Automatic Stay. This request seeks to bar specific creditors from bringing or continuing legal action against the insolvent corporation.

Among the allegations were that the platform failed to separate customer assets from the company’s operating capital and failed to maintain a surety bond in a sufficient amount on a consistent basis. Greenberg contended that the OFR has administrative discretion in deciding which infractions to pursue in their Administrative Complaint. According to the petition, the OFR worked with financial regulators from Texas, Maryland, and Michigan to conduct a multistate assessment of Bittrex Inc. between October 2022 and March 2023.

Bittrex Inc. stated on March 31 that it would cease operations in the United States, citing an unclear regulatory and economic environment. According to the file made on Wednesday, the Office of Financial Regulation (OFR) issued a three-count complaint to the exchange platform on April 17, following the completion of the inquiry.

On the same day, the US Securities and Exchange Commission charged the firm with breaking federal laws governing the operation of a securities exchange, broker, and clearing agency. If Bittrex Inc. requested a serious conversation and potential routes for settlement, the OFR encouraged the company to seek administrative processes.

Greenberg added that after receiving the guidance, the exchange voiced “disappointment” with the OFR’s choice to pursue enforcement action rather than allowing the company to voluntarily resign its licence and leave Florida. According to Greenberg’s testimony, the platform also did not reveal any intention of declaring for bankruptcy at the time.

Bittrex Inc. voluntarily relinquished its money transmitter licence on April 30th. However, counsel for the platform insisted that, while they had previously encountered regulatory challenges, they have been in compliance with Florida law since then.

 

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