DOJ opposes Bittrex’s plan to repay customers before paying fines.
The United States Justice Department (DOJ) has filed an objection to a motion made by Bittrex, a bankrupt cryptocurrency trading platform, to allow its customers to withdraw their crypto and fiat money. The Office of Foreign Asset Control (OFAC), a branch of the U.S. Treasury, is the biggest creditor for Bittrex, but its claim would be subordinated under the Bittrex proposal.
In October, Bittrex was charged by both OFAC and the Treasury’s Financial Crimes Enforcement Network (FinCEN) for violating sanctions by allowing individuals based in Crimea, Cuba, Iran, Sudan, and Syria to carry out transactions from 2014 to 2017. The penalties assessed by the agencies were $24 million and $29 million, respectively.
A Bittrex spokesperson said that the exchange was “pleased” to resolve the charges and agreed to pay the $24 million of its penalty to FinCEN, receiving $5 million credit from FinCEN. OFAC credited Bittrex $24 million, which remains Bittrex’s largest debt.
However, Bittrex faced further problems when the U.S. Securities and Exchange Commission sued it for unregistered securities operations in April, which could result in monetary penalties. As a result, Bittrex declared bankruptcy in the U.S. Bankruptcy Court for the District of Delaware in May and proposed a plan to make customers whole.
- Korean prosecutors seize Terra founder Do Kwon’s cryptocurrency assets amidst legal troubles in multiple countries.
- Blockchain combats fraud and revolutionizes gaming.
- XRP price may reach $1 this week with $2 billion trading volume.
In its June 7 filing, the DOJ argued that the Bittrex proposal improperly applies the standard that would allow it to pay some creditors ahead of others. The DOJ also objected that the Bittrex motion is premature, as the Bittrex bankruptcy has yet to be confirmed by the court. The bankruptcy hearing will be held on June 14.
