In a recent bankruptcy court filing, the Florida Office of Financial Regulation (OFR) indicated that it is considering taking action against Bittrex, a major United States-based cryptocurrency exchange. Bittrex filed for Chapter 11 bankruptcy protection in May, and the OFR’s assistant general counsel, Brandon Greenberg, stated that the regulator had received information regarding the exchange’s alleged non-compliance with Florida law. Greenberg clarified that the OFR still retains the discretion to decide whether or not to bring charges against Bittrex.
The U.S. Securities and Exchange Commission (SEC) had previously filed a complaint against Bittrex on April 17, resulting in the exchange surrendering its Florida money transmitter license on April 30. Subsequently, Bittrex filed for bankruptcy on May 8. Despite surrendering its license, the OFR affirmed that the regulatory actions against Bittrex would continue. The SEC’s complaint included allegations that the exchange failed to properly segregate customer assets, maintain a surety bond, and contained other redacted complaints.
These enforcement actions from the SEC, the bankruptcy case, and the potential lawsuit in Florida all stem from Bittrex’s decision to wind down its operations in the U.S. due to “continued regulatory uncertainty” within the country. On June 15, the exchange announced that certain users could access their accounts and withdraw funds until August 31. It is noteworthy that while Bittrex Global, the global arm of the exchange, faced separate charges from the SEC, it has largely remained unaffected by the financial and regulatory troubles encountered by its U.S. counterpart. Bittrex Global operates under regulation in Liechtenstein and Bermuda.
As the situation unfolds, Bittrex faces the possibility of further legal consequences as the Florida OFR evaluates its compliance with state regulations. The ongoing bankruptcy proceedings and the SEC’s enforcement action against the exchange have contributed to an uncertain landscape for Bittrex and its users. It remains to be seen how these developments will impact the exchange’s operations in the U.S. and its ability to navigate the regulatory challenges it faces.