According to court documents filed on Wednesday, Bittrex Inc., a cryptocurrency exchange, has been accused of violating several laws in Florida by the state’s financial regulator. These accusations were made prior to the platform’s filing for bankruptcy in May.
Brandon Greenberg, the assistant general counsel of the Florida Office of Financial Regulation (OFR), submitted the filing opposing Bittrex Inc.’s request for an Automatic Stay. This request aims to prevent certain creditors from initiating or continuing legal actions against the bankrupt entity.
Greenberg claims that the regulator had previously advised Bittrex Inc., which is based in the United States, on potential avenues for resolving the charges brought against it.
The accusations against the platform include the failure to separate customer assets from the company’s operational funds, as well as the alleged failure to maintain an appropriate surety bond continuously.
In his declaration, Greenberg asserted that the administrative discretion of the OFR is crucial in determining which violations to include or exclude from the Administrative Complaint.
According to the filing, the OFR collaborates with financial regulators from Texas, Maryland, and Michigan between October 2022 for a comprehensive examination of Bittrex Inc., spanning multiple states.
On March 31, Bittrex Inc. Publicly declared its intention to gradually cease its operations in the United States, attributing the decision to the ambiguous regulatory and economic conditions prevailing at the time.
As per Greenberg’s statement in the filing, subsequent to conducting its investigation, the OFR lodged a complaint comprising three counts against the exchange platform on April 17. Coincidentally, on the very same day, the U.S.
The Securities and Exchange Commission accused the firm of contravening federal laws related to its functioning as a securities exchange, broker, and clearing agency.
The filing further indicated that the OFR offered guidance to the company, suggesting that if they were inclined to engage in a more substantial dialogue and potentially explore avenues for resolution, they should adhere to the administrative procedure.
Greenberg noted that following the advice, the exchange expressed its “disappointment” regarding the OFR’s decision to pursue enforcement action instead of allowing the company to voluntarily surrender its license and depart from Florida. At the time, the platform also did not disclose any intention of filing for bankruptcy, as per Greenberg’s statement.
On April 30, Bittrex Inc. voluntarily surrendered its money transmitter license. However, counsel for the platform strongly asserted that while they may have faced regulatory issues in the past, they have been compliant with Florida law since then.
Also read: Bittrex Challenges SEC’s Securities Classification of Crypto
