Key takeaways:
- The Delaware bankruptcy court dismissed the DoJ’s plea for halting the company’s plan and decided to favor it.
- Customers with “undisputed, noncontingent, and liquidated claims” can withdraw their money from the platform.
After obtaining court approval for its proposal to reimburse clients before crediting fines, Bittrex’s U.S. division will reopen withdrawals on June 15.
On June 7, the DOJ submitted a motion to halt Bittrex‘s repayment plan, claiming that the withdrawals would harm the firm’s creditors, including the OFAC and FinCEN.
In October 2022, the company received fines from FinCEN and OFAC for breaking economic sanctions. The firm was hit with penalties from the two regulators totaling $24 million and $29 million, respectively. OFAC’s $24.2 million claim is the largest among Bittrex’s creditors, according to the bankruptcy filing. Although Bittrex agreed to pay FinCen $24 million, it still owes the other two regulators $29 million in fines, making them its two biggest creditors. In the document, the DOJ stated:
“Fairness and equity demand that if the OFAC and FinCEN Debts cannot be paid in full by confirmation, the United States should have a chance to prove that the cryptocurrency assets belong to the Debtors and can be clawed back from the customers.”
On June 14, a Delaware bankruptcy court rejected the Department of Justice’s (DOJ) plea to halt the company’s plan and decided in favor of the plan, according to court documents.
Customers who have “undisputed, noncontingent, and liquidated claims” are permitted to withdraw their money from the platform in either Bitcoin or fiat, per the court decision. The court’s ruling will not have a “precedential effect” on any other bankruptcy proceedings decided in the United States, according to the order.
The judgment also does not “determine or settle” the relative priority between the firm’s creditors, who include U.S. regulatory authorities, and its clients with regard to asset ownership and debt repayment. This implies that notwithstanding the withdrawals, there may be future clawbacks by creditors.
According to Bloomberg, U.S. District Court Amy Berman Jackson ordered the two organizations, Binance US and SEC, to appear before a magistrate court on June 14 to negotiate a compromise arrangement to protect consumer assets without shutting down the exchange. There will be an update on the talks with the magistrate on June 15 at the conclusion of business hours.
