Florida Regulator Takes Enforcement Action Against Bittrex Before Bankruptcy

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Key takeaways:

  • The Florida Office of Financial Regulation is investigating Bittrex.
  • The exchange allegedly later expressed its “disappointment” that the OFR had pursued enforcement action rather than allowing the company to renounce its license.

The United States-based cryptocurrency exchange Bittrex, which registered for Chapter 11 bankruptcy protection in May, is being investigated by the Florida Office of Financial Regulation.

Brandon Greenberg, assistant general counsel for the Florida Office of Financial Regulation (OFR), stated in a document filed on July 5 with the US Bankruptcy Court for the District of Delaware that the state regulator had been informed of Bittrex’s alleged violation of Florida law. 

Greenberg said that the OFR retained “administrative discretion” over whether or not to charge Bittrex. According to Greenberg’s justification:

“Deciding which of those violations to charge or not charge in our Administrative Complaint falls squarely within the OFR’s administrative discretion,” 

Following Bittrex’s announcement that it would cease operations in the US due to “continued regulatory uncertainty” in the market, the SEC enforcement action, bankruptcy case, and prospective litigation in Florida were brought.

According to Greenberg’s filing, the OFR issued a three-count complaint to the exchange platform on April 17 as a result of its inquiry. The US Securities and Exchange Commission charged the company with breaking the law by running a securities exchange, broker, and clearing agency on the same day. 

If the corporation wanted to “have a more substantive discussion and possibly explore avenues for settlement,” the OFR encouraged it to adhere to administrative procedure, according to the submission.

The exchange allegedly later expressed its “disappointment” that the OFR had pursued enforcement action rather than allowing the company to renounce its license and depart Florida, according to Greenberg. According to Greenberg, the platform at that time did not additionally make any mention of bankruptcy filing intentions.

On April 30, Bittrex Inc. gave up its right to operate as a money transmitter, but the platform’s legal representative also “stridently asserted” that despite any prior regulatory problems, it has complied with Florida law ever since. 

The platform declared bankruptcy in the state of Delaware on May 8. On June 15, the exchange informed some users that they may access their accounts and withdraw money until August 31.

The global exchange has mostly been undisturbed by the legal and financial issues the American exchange is facing, despite the SEC filing separate charges against Bittrex Global in April. Bermuda and Liechtenstein both oversee the multinational corporation.

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