Bermuda

Bitcoin

U.S. bankruptcy judge Brendan Shannon has approved cryptocurrency exchange Bittrex's request for a $7 million loan in Bitcoin (BTC) from its parent company, Aquila Holdings, according to a Reuters report on May 10. The loan aims to facilitate the smooth running of the company's bankruptcy process without disrupting its customers.
According to a report from Reuters, Bittrex will be allowed to borrow 250 BTC, currently valued at $7 million. The exchange also plans to request an additional 450 BTC loan in a June hearing, which could bring the total value of the loans to $19 million if Bitcoin's price remains stable. Bittrex asserts that it can pay back all its customers in cryptocurrency, but the loan will help ensure the bankruptcy process proceeds without complications.
Judge Shannon agreed to the Bitcoin loan due to the cryptocurrency's unique features, such as low interest rates and built-in volatility protections. Bittrex will not be required to repay more than 110% of Bitcoin's current value when the loan is due.
The loan comes after Bittrex announced its decision to file for U.S. bankruptcy on May 8 without ceasing its global operations. The company cited regulatory challenges and reported its assets and liabilities to be between $500 million and $1 billion, with over 100,000 creditors. Bittrex's trading volume in the past 24 hours stands at $7.2 million.
The bankruptcy filing comes in the wake of the U.S. Securities and Exchanbge Commission (SEC) charging Bittrex for operating an unregistered securities exchange. As a result, Bittrex stopped accepting new deposits from U.S. customers and advised existing users to withdraw their crypto from the platform. The company's U.S. operations accounted for a minority of its overall user base, with affiliated exchanges in Liechtenstein and Bermuda representing about 77% of its 5.4 million users as of March 27, according to court documents.
Bittrex's attorney, Susheel Kirpalani, emphasized during the court hearing that the bankruptcy loan would ensure a seamless wind-down of the company while protecting customer assets. The loan, granted on an interim basis, allows Bittrex to borrow 250 Bitcoin from its non-bankrupt parent company Aquila Holdings. The total value of the proposed loan could reach $19.7 million, based on Bitcoin prices at the time of the bankruptcy filing.
Judge Shannon's approval of the loan, despite it being a "novel currency," was influenced by the favorable terms compared to other bankruptcy loans, including a relatively low 4% interest rate and built-in protections related to Bitcoin's price volatility. Bittrex intends to repay the loan in Bitcoin, with a provision that it will not be forced to pay more than 110% of Bitcoin's current value if it must acquire more Bitcoin to make loan repayments, as stated in the court documents.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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Bittrex Secures 250 $BTC Loan for Bankruptcy Proceedings

Crypto Daily™

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