Author: Jack Schickler, CoinDesk; Translated by: Song Xue, Golden Finance

  • Bittrex filed for bankruptcy in May, and the company may still remain profitable because customers have not received their funds.

  • The U.S. Secret Service is a major customer of cryptocurrency exchanges, with millions of dollars.

Most cryptocurrency bankruptcy cases are a story of frustration and loss: former customers of FTX or Celsius painfully signed up and waited, hoping that one day they would get some of their assets back.

The same cannot be said for Bittrex’s U.S. arm, which had a hard time convincing more than 1 million creditors to keep quiet and take their money — which could mean a Chapter 11 bankruptcy that makes a profit for the institution.

Nearly 36,000 customers have withdrawn about $143 million worth of cryptocurrency since May, with the deadline for filing claims now expired, Patty Tomasco, a lawyer for the company, said in a Delaware court on Wednesday.

That’s just a fraction of the 1.6 million customers emailed to return their funds after the company’s U.S. and Malta divisions filed for bankruptcy in May.

“One of the things we wanted to explore is why our engagement was so low,” Tomasco said, adding that some customers may be wary of providing the additional personal information required for money laundering checks just to request a relatively small amount. “They’re really making a calculated decision.”

One of the main holders of dollars that did get recovered was probably an arm of the US government, but even so there was excess money, the court heard.

“The Secret Service had one of our largest accounts, $6.2 million," Tomasco said. "We worked with the agency to get them to successfully withdraw that amount.”

Tomasco said, “I believe there will be money left over,” although regulators responsible for overseeing sanctions and securities laws may still have to pay bankruptcy administration costs and fines.

Although Judge Brendan Shannon was not asked to make any rulings on purely informational points, he was clearly as confused as everyone else.

“This case has unusual characteristics,” Shannon said. “All cryptocurrency cases have unusual characteristics.”