Bittrex, which filed for bankruptcy in May, could be left in profit as customers aren’t claiming their money
The U.S. Secret Service was a major client with millions in the crypto
Most crypto bankruptcy cases are a tale of frustration and loss: Agonized ex-customers of FTX or Celsius sign up and wait in the hope they might, one day, get back some fraction of their holdings.
Not so Bittrex’s U.S. arm, which is having a hard time persuading over a million creditors to shut up and take their money – potentially meaning the Chapter 11 bankruptcy leaves the estate in profit.
Since May, and with the deadline for filing a claim now expired, just under 36,000 customers have withdrawn around $143 million worth of crypto, the company’s lawyer Patty Tomasco told a Delaware courtroom Wednesday.
That’s just a fraction of the 1.6 million customers who were sent emails asking them to withdraw after the bankruptcy was filed by the company’s U.S. and Maltese arms in May.
“One of the things we wanted to explore was why are we getting such low levels of engagement,” Tomasco said, adding that some customers might have been wary of providing the extra personal information required for money laundering checks just to claim a relatively small amount. “They really are making a calculated decision.”
One of the major holders who did seek their greenbacks back was a perhaps surprising branch of the U.S. government – but even so there’ll be money to spare, the court was told.
“The Secret Service had one of our largest accounts, at $6.2 million,” Tomasco said. “We worked with that agency for them to successfully withdraw that amount.”
“I believe there will be money left over” for the estate, Tomasco said, despite having to pay the cost of administering the bankruptcy and fines still potentially due to regulators responsible for policing sanctions and securities law.
Though he wasn’t asked to give any ruling on a mere information point, Judge Brendan Shannon is clearly as perplexed as anyone.
“This case has unusual features,” Shannon said. “All the crypto cases do.”