The firm’s U.S. unit filed for bankruptcy May 8 after the U.S. Securities and Exchange Commission (SEC) accused the company and its co-founder, William Shihara, of violating securities laws and failing to register as a broker-dealer and clearing agency. As a result, Bittrex stopped working with U.S. customers.
On May 12, the company asked a Pennsylvania court in Delaware County to allow customers to withdraw their assets without the costs and delays associated with the litigation. However, the authorities did not approve such a decision.
“Separating creditors into classes outside of a hearing is improper,” the Delaware County Bankruptcy Court ruled.
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Court documents indicate that Bittrex “failed to explain why cryptocurrency asset ownership issues need to be resolved before a bankruptcy plan can be approved.”.
A hearing on Bittrex’s plan to allow withdrawals is due June 14.
Bittrex’s U.S. unit manages $50 million in customer funds in cash and $250 million in cryptocurrency;
Bittrex executives said the bankruptcy does not affect the operations of its trading platforms outside the U.S.. As for Bittrex Global, an international company based in Liechtenstein, it was not included in the application. Therefore, Bittrex Global will continue to operate as usual for customers outside the U.S.