- These funds are needed to quickly pay off customers.
- The loan will be provided by the parent company Aquila Holdings
Bittrex Inc received in court permission Borrow $7 million in bitcoin.
Recall that the American division of Bittrex Inc. closed on April 30, citing unclear cryptocurrency laws. On May 9, they filed for Chapter 11 bankruptcy. But the exchange said that this does not affect its international platform Bittrex Global.
Operations in the US accounted for a small amount of the total volume of the crypto exchange. According to court documents, 77% of its users are listed on affiliated exchanges based in Liechtenstein and Bermuda.
Client funds that have not been withdrawn by April 30 remain safe.
Bittrex believes that the company has enough cryptocurrency to pay 100% of the payments to all remaining customers. A bankruptcy loan is needed for smooth winding down. This will protect clients’ assets and speed up payouts, Sushil Kirpalani, a lawyer for the crypto exchange, wrote in the documents.
The court granted the company’s request. They will now borrow 250 BTC from their parent firm, Aquila Holdings, which has not filed for bankruptcy. In June, Bittrex will apply for a loan of another 450 BTC. In total, they want to raise $19.7 million in bitcoin.
Bittrex judge Brendan Shannon said that the loan in the “new currency” (as he called bitcoin) has better terms than conventional bankruptcy loans. It involves a low interest rate and insurance against BTC price volatility.