The Florida
Office of Financial Regulation (OFR) said it issued a three-count complaint
against Bittrex in late April, days before the troubled cryptocurrency exchange
filed for bankruptcy
protection in May. In the complaint, OFR accused Bittrex of failing to segregate its customer’s assets from
its own operating capital and not maintaining a surety bond in the correct
amount at all times.
Brandon
Greenberg, an Assistant General Counsel at the OFR, disclosed the details in a court declaration filed yesterday (Wednesday)
before the bankruptcy court in the District of Delaware. Greenberg filed the statement in support
of the state regulator’s objection to Bittrex’s motion for ‘automatic stay’, which is a court order that stops creditors from
taking certain actions against a bankrupt firm’s estate. According to the court
filing, the
complaint sent to Bittrex was the product of a multi-state investigation that
includes financial regulators from Texas, Maryland and Michigan.
On March
31, Riche Lai, the Co-Founder and CEO of Bittrex announced that the
cryptocurrency exchange had begun winding down its services in the country as “operating in the US is no longer
feasible.” OFR said its received Bittrex’s notice about the move, plus the
exchange’s intention to surrender its license “on or before April 30, 2023.”
Thank you everyone…. <3 ;( pic.twitter.com/kq8nTRT0Aj
— Richie Lai (@richiela) March 31, 2023
Reacting to
OFR’s complaint, Bittrex’s counsel expressed ‘disappointment’ at the
regulator’s decision to take enforcement action rather than let the firm exit the
state. The state agency said it gave Bittrex a May 15 deadline to initiate a
petition for settlement
negotiations. During this period, OFR further pointed out, Bittrex did not disclose its financial
condition or bankruptcy plans.
In a
further engagement with Bittrex on June 1, 2023, the exchange’s counsel
‘stridently asserted’ that OFR’s violation claims against the firm were ‘older’ with no recent violations alleged. The watchdog said the exchange made
the claim despite its
possession of evidence that Bittrex continued to violate Florida
laws “on an ongoing basis.”
“In
response, I [Greenberg] explained
how the OFR’s examination findings revealed recent conduct by Bittrex Inc.
that violated several provisions of Chapter 560, Florida Statutes,
which indicated an ongoing pattern of noncompliance with our money services
business laws, and that it was within our administrative discretion in deciding
which legal violations to charge and not charge in our Administrative
Complaint,” Greenberg explained.
Bittrex vs. SEC
OFR’s revelation comes over two months after the US Securities and Exchange
Commission (SEC) sued Bittrex and its
Co-Founder and former CEO, William Shihara, over allegations that the digital
asset exchange
operated as a national securities exchange, broker and clearing agency without
registration.
In the
latest development on the case, the bankruptcy court in Delaware
recently authorized Bittrex to start paying its customers
despite objection by the United States
government.
New LiteFinance office; TAIFEX on TradingView; read today’s nuggets.
The Florida
Office of Financial Regulation (OFR) said it issued a three-count complaint
against Bittrex in late April, days before the troubled cryptocurrency exchange
filed for bankruptcy
protection in May. In the complaint, OFR accused Bittrex of failing to segregate its customer’s assets from
its own operating capital and not maintaining a surety bond in the correct
amount at all times.
Brandon
Greenberg, an Assistant General Counsel at the OFR, disclosed the details in a court declaration filed yesterday (Wednesday)
before the bankruptcy court in the District of Delaware. Greenberg filed the statement in support
of the state regulator’s objection to Bittrex’s motion for ‘automatic stay’, which is a court order that stops creditors from
taking certain actions against a bankrupt firm’s estate. According to the court
filing, the
complaint sent to Bittrex was the product of a multi-state investigation that
includes financial regulators from Texas, Maryland and Michigan.
On March
31, Riche Lai, the Co-Founder and CEO of Bittrex announced that the
cryptocurrency exchange had begun winding down its services in the country as “operating in the US is no longer
feasible.” OFR said its received Bittrex’s notice about the move, plus the
exchange’s intention to surrender its license “on or before April 30, 2023.”
Thank you everyone…. <3 ;( pic.twitter.com/kq8nTRT0Aj
— Richie Lai (@richiela) March 31, 2023
Reacting to
OFR’s complaint, Bittrex’s counsel expressed ‘disappointment’ at the
regulator’s decision to take enforcement action rather than let the firm exit the
state. The state agency said it gave Bittrex a May 15 deadline to initiate a
petition for settlement
negotiations. During this period, OFR further pointed out, Bittrex did not disclose its financial
condition or bankruptcy plans.
In a
further engagement with Bittrex on June 1, 2023, the exchange’s counsel
‘stridently asserted’ that OFR’s violation claims against the firm were ‘older’ with no recent violations alleged. The watchdog said the exchange made
the claim despite its
possession of evidence that Bittrex continued to violate Florida
laws “on an ongoing basis.”
“In
response, I [Greenberg] explained
how the OFR’s examination findings revealed recent conduct by Bittrex Inc.
that violated several provisions of Chapter 560, Florida Statutes,
which indicated an ongoing pattern of noncompliance with our money services
business laws, and that it was within our administrative discretion in deciding
which legal violations to charge and not charge in our Administrative
Complaint,” Greenberg explained.
Bittrex vs. SEC
OFR’s revelation comes over two months after the US Securities and Exchange
Commission (SEC) sued Bittrex and its
Co-Founder and former CEO, William Shihara, over allegations that the digital
asset exchange
operated as a national securities exchange, broker and clearing agency without
registration.
In the
latest development on the case, the bankruptcy court in Delaware
recently authorized Bittrex to start paying its customers
despite objection by the United States
government.
New LiteFinance office; TAIFEX on TradingView; read today’s nuggets.
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- Source: https://www.financemagnates.com//cryptocurrency/bittrex-faced-enforcement-action-from-florida-before-bankruptcy-declaration/
