Florida’s Financial Regulator Accuse Bittrex Exchange for Violating Several State Laws Before Filing for Bankruptcy

Bittrex cryptocurrency exchange which filed for Chapter 11 bankruptcy on May 8 in the US state of Delaware, is now accused of violating several laws in the state of Florida.

Florida’s financial regulator has filed a case against the exchange accusing it of violating multiple state laws, prior to the platform’s bankruptcy filing in May.

Per court documents, Brandon Greenberg, the assistant general counsel of the Florida Office of Financial Regulation (OFR) submitted the filing on July 5. Bittrex had failed to comply with several provisions of chapter 560, Florida Statutes, and corresponding rules, the filing noted.

Greenberg claims that the state’s regulator had previously advised Bittrex on exploring options for resolving the charges filed against it. OFR is against a request by Bittrex for an Automatic Stay – that temporarily prevents creditors from pursuing debtors for money that they owe.

The accusations against Bittrex, among others, include failure to segregate customer assets from the company’s operational funds, and “failure to maintain a surety bond in the correct amount at all times.”

“Deciding which of those violations to charge or not charge in our Administrative Complaint falls squarely within the OFR’s administrative discretion.”

The filing also noted that OFR collaborated with financial watchdogs from the US states of Texas, Maryland, and Michigan between October 2022 and March 2023 for a multistate examination.

Bittrex Withdrew US Operations in March

Bittrex exchange announced its intentions to shut down US operations earlier this year after it was fined $53 million by the Treasury’s Office of Foreign Assets Control and Finance Crime Enforcement Network. The firm took note of an uncertain regulatory and economic environment.

After its investigation, the OFR issued a complaint comprising three courts against Bittrex on April 17, the filing read. At the same time, the US Securities and Exchange Commission (SEC) accused the exchange of breaking federal laws for operating a securities exchange, broker and clearing agency.

The regulator further gave guidance to the firm on whether it was interested in “having a more substantive discussion and possibly exploring avenues for settlement,” Greenberg wrote. Following the advice, Bittrex expressed “disappointment” that the OFR had taken enforcement action against the company.

“On April 30, 2023, Bittrex Inc., in accordance with Florida law, surrendered its Florida money transmitter license,” the filings said.