Court filings from Wednesday reveal that Bittrex Inc., a cryptocurrency exchange, faced accusations of violating several Florida laws by the state’s financial regulator before filing for bankruptcy in May.
Brandon Greenberg, assistant general counsel to the Florida Office of Financial Regulation (OFR), opposed Bittrex Inc.’s request for Automatic Stay, which aimed to block certain creditors from initiating or continuing actions against the bankrupt estate. Greenberg mentioned that the regulator had advised Bittrex Inc., based in the United States, on exploring options to resolve the charges against them.
Among the accusations, the platform was cited for failing to segregate customer assets from the company’s operating capital and not maintaining a surety bond in the appropriate amount consistently. Greenberg argued that the OFR has administrative discretion in determining which violations to charge in their Administrative Complaint.
According to the filing, the OFR collaborated with financial regulators from Texas, Maryland, and Michigan in conducting a multistate examination of Bittrex Inc. between October 2022 and March 2023.
Bittrex announced plans to step down on March 31
On March 31, Bittrex Inc. announced its decision to wind down its operations in the United States, citing an uncertain regulatory and economic environment.
According to the filing submitted on Wednesday, the Office of Financial Regulation (OFR) issued a three-count complaint to the exchange platform on April 17, subsequent to the completion of the investigation.
On the same day, the U.S. Securities and Exchange Commission accused the firm of violating federal laws related to operating as a securities exchange, broker, and clearing agency. The OFR advised Bittrex Inc. to follow administrative procedures if the company desired a substantive discussion and potential avenues for settlement.
Greenberg mentioned that Bittrex Inc. expressed “disappointment” later on when the OFR took enforcement action instead of allowing the company to surrender its license and exit Florida. The platform did not disclose plans to file for bankruptcy at that time, as per Greenberg.
While Bittrex Inc. surrendered its money transmitter license on April 30, the platform’s counsel strongly asserted compliance with Florida law since then, despite acknowledging past regulatory issues.
