- The funds are needed to pay customers quickly
- The loan will be provided by parent company Aquila Holdings
Bittrex Inc. has received court approval to borrow $7 million in bitcoins. Remind that the U.S. unit of Bittrex Inc.. closed April 30, citing vague cryptocurrency laws.
On May 9, they filed for Chapter 11 bankruptcy. But the exchange said this does not affect its international platform, Bittrex Global.
Transactions in the U.S. accounted for a small amount of the crypto exchange’s total volume.
According to court documents, 77% of its users are registered on affiliated exchanges based in Liechtenstein and Bermuda.
Customer funds that were not withdrawn by April 30 remain safe.
Bittrex believes it has enough cryptocurrency to 100% pay off all remaining customers. And bankruptcy credit is needed for a smooth wind-down.
This will protect customers’ assets and speed up payments, the cryptocurrency exchange’s lawyer, Sushil Kirpalani, wrote in the documents.
The court granted the company’s petition. Now they will borrow 250 BTC from their parent firm Aquila Holdings, which has not declared bankruptcy.
Bittrex will apply for another 450 BTC credit in June. In total, they want to raise $19.7 million in bitcoins.
Bittrex judge Brendan Shannon said the loan in the “new currency” (what he called bitcoins) has better terms than conventional bankruptcy loans.
It assumes a low interest rate and insurance against BTC price volatility.