May 10 (Reuters) – Bankrupt cryptocurrency exchange Bittrex Inc received court permission Wednesday to borrow $7 million in bitcoin to fund the start of its Chapter 11 case.
Seattle-based Bittrex filed for bankruptcy Monday, saying it intended to return customer funds and wind down its U.S. operations. The company’s international affiliates will continue to operate crypto exchanges for customers outside of the U.S., but Bittrex said that the U.S. regulatory environment had become untenable after the SEC sued the company for allegedly running an unregistered securities exchange.
Before filing for bankruptcy, Bittrex stopped accepting new deposits from U.S. customers and told its existing users to withdraw their crypto from the platform.
Bittrex’s U.S. operations made up a minority of its overall users. Affiliated exchanges based in Liechtenstein and Bermuda accounted for about 77% of the company’s 5.4 million users as of March 27, according to court filings.
Bittrex believes that it has enough cryptocurrency to fully repay all remaining customers, and the bankruptcy loan will ensure a smooth wind-down that protects customer assets, attorney Susheel Kirpalani told U.S. Bankruptcy Judge Brendan Shannon at a Wednesday court hearing in Wilmington, Delaware.
Shannon approved the loan on an interim basis, allowing Bittrex