The United
States has objected to a proposal by cryptocurrency exchange Bittrex to return
customer cash and cryptocurrency as part of a process to window its operations
in the country. Bittrex’s US arm filed for bankruptcy
protection in May
weeks after exiting the country over regulatory challenges.
In the same
month, the cryptocurrency exchange sought permission from the bankruptcy court in Delaware to pay
its customers their crypto holdings in line with terms agreed with customers and to avoid costly litigation.
The exchange argued that courts have previously permitted payments such as for
critical services before a firm’s bankruptcy plan confirmation hearing.
However, in
its motion filed
yesterday (Wednesday), the US government countered the proposal, describing it
as ‘premature’ as ‘confirmation is months away.’ It noted that if Bittrex
sought to avoid litigation expense, then it ought to instead have filed a motion
seeking compromise authority or permission to settle the dispute without going
to trial.
Furthermore,
the government dismissed Bittrex’s argument that courts previously authorized
payments for critical services, noting that the ‘critical vendor’ standard does
not apply to the case.
“This is
not the case here. Instead of reorganizing, the Debtors [Bittrex] intend to
liquidate and shutdown their exchange,” the government’s counsel noted. “The
Debtors…
