• Bittrex Inc. has been granted permission by a U.S court to borrow $7 million worth of bitcoin (BTC) for its Chapter 11 bankruptcy case.
• The exchange filed for bankruptcy protection on Monday, intending to return customer funds and shut down its American businesses.
• The filing came after the firm received a Wells Notice from the Securities and Exchange Commission (SEC) over alleged violations of investor protection laws and the operation of an unregistered securities exchange.
Bittrex Gets Permission to Borrow $7 Million in BTC
A U.S court has given troubled cryptocurrency exchange Bittrex Inc. permission to borrow $7 million worth of bitcoin (BTC) to fund the start of its Chapter 11 bankruptcy case. Bankruptcy Judge Brendan Shannon approved the exchange’s request on an interim basis at a Wednesday court hearing in Wilmington, Delaware.
Reason Behind Bankruptcy Filing
The filing came a few weeks after the firm, which announced that it was leaving the U.S in March due to regulatory challenges, received a Wells Notice from the Securities and Exchange Commission (SEC) over alleged violations of investor protection laws and the operation of an unregistered securities exchange.
Impact on Customers
Before going bankrupt, Bittrex stopped accepting new deposits from U.S customers and asked existing users to withdraw their crypto assets. Court filings have shown that as of March 27, the exchange’s U.S customer base constituted a minor portion — just 2% — of its total userbase worldwide with only about 6,000 customers holding roughly $28 million worth of digital assets on its platform at that time .
Bittrex’s lawyer says the Bitcoin loan will enable the crypto exchange to return customers’ assets back them quicker than if it had simply sold off parts or all of its business through traditional liquidation proceedings or some other means during bankruptcy litigation .
The loan approval is expected to expedite proceedings related to returning user funds faster compared with traditional liquidation proceedings or other options available during bankruptcy litigation