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- Analysis finds thousands of improbable transactions in Bittrex bankruptcy filings.
- They could impact potential payouts to creditors.
- Bittrex has a history of poor compliance.
A detailed review of Bittrex’s bankruptcy filings has uncovered thousands of improbable transactions that could distort payouts to creditors. The analysis, conducted by a regulatory researcher, highlights patterns suggesting fabricated activity across multiple court filings.
Such discrepancies could impact almost 2 million customers who had funds before the collapse of the currency exchange in 2023. Discrepancies discovered in the transactions include repeated withdrawals, micro-payments, or the processing of blockchain networks that are inactive.
More than$500 million in transactions seem highly questionable, casting doubts on the financial integrity of the data provided to the court by Bittrex. Established in the Seattle city in the year 2014, the early success of the firm was the availability of diverse cryptocurrency assets, coupled with the employment of cold wallets for securing funds.
However, its history is laden with cases of failed compliance, as well as tumultuous relationships with the relevant authority. The company actually went bankrupt in May 2023 due to charges filed by the US Securities & Exchange Commission for lack of registration.
Bittrex’s Flawed Records Threaten Fair Distribution of Funds
Experts point out that the inefficiencies in transaction records are likely to hamper the process of fund redistributions intended for users and other creditors. When Bittrex went bankrupt, the exchange had registered 1.6 million users, but only 36,000 made their claims.
This also means that if fabricated data affected the customers’ balances, there could be discrepancies throughout the creditor list. The same flawed data determined the list of the top 20 creditors who receive priority in the payment process. The bankruptcy case against Bittrex Global ended in April 2025, but the creditors still have not received payment.
The US Treasury Office of Foreign Assets Control is one of the biggest claimants, having previously owed $24 million in connection with the violation of sanctions. There were also thousands of transactions that defied logic, according to the analysis.
Most of the funds were below the minimum limit required for withdrawal by the exchange, with some even being less than the transaction charges. Some of the transactions involved withdrawing the same value of cryptocurrency on the same day, which is statistically impossible.
Penalties and Settlements Highlight Ongoing Oversight Issues
Issues with Bittrex go beyond the bankruptcy filing. There have been warnings from the regulators about the poor compliance record and lack of identity verification on the platform. In 2019, the New York regulators denied the platform its license because of serious loopholes in money laundering measures taken by the exchange. This was in reference to the existence of dummy accounts, some of which had names of celebrities acting as placeholders.
In 2022, Bittrex was penalized by $53 million for allowing transactions involving countries that are sanctioned, apart from the lack of compliance with proper reporting standards. The following year, it settled with the SEC on matters of operating an unregistered exchange, with the penalty being $24 million.
These recurring mishaps show a clear pattern of oversight failure. The Chapter 11 bankruptcies now cast doubt on that oversight, suggesting that Bittrex’s operational problems ran deep in its final months and causing creditors and users to worry about recovering their lost money.
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