Florida’s financial regulator accuses Bittrex Exchange of violating state laws prior to bankruptcy filing.

Bittrex, a cryptocurrency exchange that filed for Chapter 11 bankruptcy in the state of Delaware, is now facing accusations of violating laws in the state of Florida.

The financial regulator in Florida has filed a case against the exchange, alleging that it violated multiple state laws before filing for bankruptcy in May.

According to court documents, Brandon Greenberg, the assistant general counsel of the Florida Office of Financial Regulation (OFR), submitted the filing on July 5. The filing noted that Bittrex failed to comply with several provisions of chapter 560, Florida Statutes, and corresponding rules.

Greenberg claims that the regulator had previously advised Bittrex on resolving the charges filed against it. The OFR opposes Bittrex’s request for an Automatic Stay, which temporarily prevents creditors from pursuing debtors for money owed.

The accusations against Bittrex include failure to segregate customer assets from the company’s operational funds and failure to maintain a surety bond in the correct amount at all times.

“Deciding which of those violations to charge or not charge in our Administrative Complaint falls squarely within the OFR’s administrative discretion.”

The filing also mentioned that the OFR collaborated with financial watchdogs from Texas, Maryland, and Michigan between October 2022 and March 2023 for a multistate examination.

Bittrex Withdrew US Operations in March

Earlier this year, Bittrex announced its intentions to shut down its operations in the US due to a $53 million fine imposed by the Treasury’s Office of Foreign Assets Control and Financial Crimes Enforcement Network. The firm cited an uncertain regulatory and economic environment.

Following its investigation, the OFR issued a complaint consisting of three counts against Bittrex on April 17. At the same time, the US Securities and Exchange Commission (SEC) accused the exchange of violating federal laws by operating as a securities exchange, broker, and clearing agency.

The regulator also offered guidance to the firm on whether it was interested in “having a more substantive discussion and possibly exploring avenues for settlement,” as stated by Greenberg. In response, Bittrex expressed “disappointment” that the OFR had taken enforcement action against the company.

“On April 30, 2023, Bittrex Inc., in accordance with Florida law, surrendered its Florida money transmitter license,” the filings said.

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