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U.S. government objects to Bittrex’s customer repayment plan

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The U.S. government has objected to a proposal by the bankrupt crypto exchange Bittrex to repay its customers.

U.S. government objects to Bittrex’s customer repayment plan

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  • The U.S. administration has filed a court action against Bittrex’s proposal to repay its customers.
  • Bittrex owes $53 million to the U.S. Treasury, thanks to two previous settlements.

The U.S. administration has objected to a proposal by the bankrupt crypto exchange Bittrex to repay customer funds and crypto assets.

Bittrex’s U.S. subsidiary declared bankruptcy in early May after regulators alleged that it was running an illegal securities exchange. Last year, the exchange agreed on two settlements worth $53 million with the Treasury for allowing customers based in Iran, Cuba and Crimea to engage in unauthorized transactions.

The firm later sought the court’s approval to allow customers to withdraw their holdings without incurring the expense and delay of litigation. The U.S. government, on the other hand, considers that prioritizing creditors is wrong.

“Siloing creditors into subordinated classes outside of the confirmation hearing is improper,” read the government’s filing.

Bittrex’s U.S. division has customer cash and crypto assets worth $50 million and $250 million each. Attorneys representing the group told the Delaware court that its operational company, which also declared bankruptcy, has $120 million in customer cash and cryptocurrency. They added that both companies have enough assets to honor withdrawals.

SEC goes after multiple alleged securities violations

When the Securities and Exchange Commission (SEC) charged Bittrex in April, it alleged that Bittrex and its former CEO Bill Shihara deliberately violated the registration requirements of the federal securities laws. They instructed crypto asset issuers to delete certain statements from their offering papers that would indicate that they were securities.

The regulators also accused Bittrex of earning at least $1.3 billion in transaction fees from investors, including those from the U.S., without registering or complying with U.S. securities laws.

“Bittrex repeatedly chose profits over investor protection,” said SEC’s Director of Enforcement Gurbir S. Grewal.

Earlier, the SEC’s persistent delays caused Binance to cancel its plan to acquire the assets of insolvent crypto lender Voyager. The SEC filed a lawsuit against Binance early this week for violating securities laws.

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Saman Waris works as a News Editor at AMBCrypto. She has always been fascinated by how the tides of finance and technology shape communities across demographics. Cryptocurrencies are of particular interest to Saman, with much of her writing centered around understanding how ideas like Momentum and Greater Fool theories apply to altcoins, specifically, memecoins. A graduate in history, Saman worked the sports beat before diving into crypto. Prior to joining AMBCrypto 2 years ago, Saman was a News Editor at Sportskeeda. This was preceded by her stint as Editor-in-Chief at EssentiallySports.
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