For further rulings, Bittrex will have to wait for a bankruptcy case hearing on June 14th.
The US Department of Justice (DOJ) objected to a bankrupt cryptocurrency trading platform's Bittrex proposal to repay its users.
In the DOJ's argument, filed on June 7th, the department insisted that Bittrex's payout proposal manipulates standards in a way that could enable the company to prioritize some creditors over others, a move it argues is improper.
Did you know?
Want to get smarter & wealthier with crypto?
Subscribe - We publish new crypto explainer videos every week!
What is NEO in Crypto? Chinese Ethereum Explained (ANIMATED)
In particular, the statement from the DOJ filing read:
Fairness and equity demand that if the OFAC and FinCEN Debts cannot be paid in full by confirmation, the United States should have a chance to prove that the cryptocurrency assets belong to the Debtors and can be clawed back from the customers.
The DOJ pointed out that Bittrex's motion is premature since the bankruptcy has not been confirmed by the court. A hearing concerning Bittrex's bankruptcy case is set for June 14th.
In October, Bittrex faced charges from the Office of Foreign Assets Control (OFAC) and the Financial Crimes Enforcement Network (FinCEN), both under the US Treasury, for violating sanctions.
Allegedly, the company facilitated transactions for individuals residing in sanctioned regions such as Crimea, Cuba, Iran, Sudan, and Syria between 2014 to 2017. The punitive measures were hefty, with OFAC and FinCEN slapping fines of $24 million and $29 million, respectively.
In October, a Bittrex spokesperson stated that the company is happy to settle the accusations. Bittrex agreed to FinCEN's $24 million fine, receiving a $5 million discount, while OFAC wants Bittrex to pay the full $24 million.
On top of that, in April, the cryptocurrency platform faced a lawsuit from the US Securities and Exchange Commission (SEC), alleging unregistered securities operations.
In May, Bittrex filed for bankruptcy in the District of Delaware and quickly proposed a plan to compensate its customers.
The DOJ's objections have added another layer of complexity to Bittrex's attempts to resolve its financial and legal challenges. The decision by the court in the upcoming bankruptcy hearing could shape the future of the cryptocurrency exchange and its dealings with its customers and creditors.
