Bittrex Global to End Trading on Dec 4, 2023

Bittrex Global, headquartered in Liechtenstein, has announced its decision to wind down operations. This process will begin with a cessation of all trading activities effective December 4, 2023. This announcement follows a period of regulatory challenges and legal proceedings that have impacted the company’s operations.

The wind-down process was detailed in an update published on the Bittrex Global website on November 20th. As per the announcement, from December 4th, the platform will restrict activities to withdrawals only, discontinuing all trading functions. Users holding U.S. dollar balances are mandated to convert these to euros or cryptocurrencies before the cessation date to enable withdrawals. This step is essential to ensure that customers can retrieve their funds from the platform.

This closure announcement comes approximately nine months after Bittrex, the U.S.-based subsidiary, started winding down operations due to ongoing regulatory issues. In April, the U.S. Securities and Exchange Commission (SEC) accused Bittrex of operating as an unregistered exchange and broker. Subsequently, Bittrex filed for Chapter 11 bankruptcy protection in May, followed by a settlement with the SEC in August, agreeing to pay $24 million in fines and interest.

Acknowledging the potential inconvenience to its customers, Bittrex Global emphasizes its commitment to a transparent and smooth transition. The company assures that all funds and tokens remain secure and accessible for withdrawal, adhering to their terms of service and applicable laws. The customer support team remains operational to assist with queries and concerns during this transition phase.

Bittrex Global has also cautioned its customers against potential scams. The company reiterates that official communication will only be through its verified channels, advising customers to be vigilant and trust only emails from Bittrex’s official domains.

The decision by Bittrex Global to cease operations is a significant event in the crypto exchange industry, reflecting the ongoing challenges faced by such platforms in navigating complex regulatory environments. The company’s strategic approach to winding down, prioritizing customer asset security and clear communication, underlines its commitment to responsible management during this transitional period.

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Coin Cloud Customer Data and Source Code Allegedly Stolen

Coin Cloud, a participant in the cryptocurrency ATM market, has lately come under fire for a serious cybersecurity vulnerability. This episode adds to the company’s already long list of difficulties, which began with its filing for Chapter 11 bankruptcy in February 2023.

An extensive data breach at Coin Cloud has been attributed to an unidentified threat actor. The claims state that the hack led to the exfiltration of private client information from Coin Cloud’s ATMs. Approximately 70,000 client selfies that were taken using ATM cameras are included in this data, along with over 300,000 customers’ personally identifiable information (PII). A variety of information is included in the compromised PII, such as Social Security numbers, birth dates, complete names, email addresses, phone numbers, current jobs, physical addresses, and more. According to the threat actor, this information is relevant to people in Brazil as well as the United States.

In addition, the perpetrators of the hack claim that they have taken the source code for the whole of Coin Cloud’s backend. This is a development that may have far-reaching repercussions for the safety of the firm as well as its operational integrity.

The recent past of Coin Cloud has been marked by a series of financial challenges, which culminated in the company’s filing for bankruptcy earlier this year. It was a huge event when the corporation decided to file for Chapter 11 bankruptcy in February of 2023. This indicated that the company was experiencing serious financial hardship. When taken together, this bankruptcy petition and the most recent data leak portray a picture of a firm that is struggling to cope with numerous crises.

Because of the breach at Coin Cloud, major questions have been raised regarding the safety precautions taken at cryptocurrency automated teller machines (ATMs), which are a relatively new but fast increasing industry in the financial technology landscape. The loss of such a large quantity of sensitive customer data may have significant repercussions for the people who were impacted, including the possibility that their identities would be stolen and that they would become victims of financial fraud.

In addition, the allegation of stealing source code adds still another level of complication to the matter. If what you say is accurate, then the whole functioning of Coin Cloud might have its security compromised, leaving it open to more assaults and opportunities for exploitation. As Coin Cloud makes its way through these trying times, the emphasis will be on how the firm reacts to this hack and what steps it takes to strengthen its cybersecurity defenses.

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SEC Charges FTX Auditor Prager Metis Over Independence Violations

On September 29, 2023, the Securities and Exchange Commission (SEC) announced legal charges against the international accounting firm Prager Metis CPAs, LLC and its Californian counterpart, Prager Metis CPAs LLP (jointly referred to as Prager), for alleged violations of auditor independence rules and for supposedly aiding and abetting their clients in breaching federal securities laws. The complaints pointed to improper conduct over approximately three years, from December 2017 to October 2020, during which Prager was alleged to have included indemnification clauses in engagement letters for more than 200 audit-related assignments, thereby compromising its independence as required by federal securities laws.

Prager’s alleged misconduct involved repeatedly signing engagement letters with indemnification clauses and issuing “accountant’s reports” purporting independence, despite senior partners being notified that such actions jeopardized the firm’s independence. The SEC complaint suggests that many of Prager’s clients incorporated these “accountant’s reports” in their SEC filings, and accuses Prager of not advising its clients about these violations even after being informed by the Public Company Accounting Oversight Board (PCAOB) that such actions were in violation of federal laws concerning auditor independence.

The SEC’s action against Prager gains additional significance considering the firm’s prior engagement with cryptocurrency exchange FTX before the latter filed for Chapter 11 bankruptcy in November 2022. Prager Metis provided audit and tax preparation services to FTX, a notable engagement revealed in earlier court documents. Although the SEC’s complaint did not specifically name FTX, it highlighted “hundreds” of auditor independence violations over a span of nearly three years.

The case underscores the stringent auditor independence framework that prevents an auditor from providing additional services that might pose a conflict of interest. Eric I. Bustillo, Director of the SEC’s Miami Regional Office, emphasized the importance of auditor independence in safeguarding financial reporting integrity and fostering public trust.

The SEC’s complaint seeks a permanent injunction, disgorgement plus prejudgment interest, and a civil monetary penalty against Prager, marking a stern reminder for auditing firms about the critical importance of adhering to federal laws and regulations concerning auditor independence.

Furthermore, the legal scrutiny extends beyond Prager Metis. A recent filing on September 21 revealed that the law firm Fenwick & West, which had previous engagements with FTX, is also under investigation. The plaintiffs argue that Fenwick & West should be held partially responsible for FTX’s downfall due to alleged over-extension in service offerings to the exchange.

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Prime Trust Files for Chapter 11 Bankruptcy

Prime Trust, LLC, has found itself at the centre of a complicated financial and legal scenario. On August 14, 2023, the business and a few of its affiliates voluntarily petitioned the United States Bankruptcy Court for the District of Delaware for Chapter 11 bankruptcy protection.

The filing is the result of a sequence of occurrences that started in early June 2023, when rumours about Prime Trust’s bankruptcy started to spread. Nevada’s Department of Business and Industry issued a stop and desist order on June 21 due to the company’s “critically deficient” financial state and unable to honour client withdrawals, which exacerbated the problem.

When BitGo, a digital asset custodian, stated on June 22 that it was terminating its takeover of the firm, Prime Trust’s problems only became worse. Banq, the payments division of Prime Trust, filed for bankruptcy in the US a few days before to this ruling, reporting $17.72 million in assets and $5.4 million in liabilities.

The petition from the Financial Institutions Division of the state was approved on July 14 by the Eighth Judicial District Court of Nevada, putting Prime Trust under receivership. The court-appointed receiver was given the responsibility of monitoring the day-to-day operations of the corporation, and a hearing has been set for the 22nd of this month to assess whether or not this decision will be permanent.

The Chapter 11 application by Prime Trust is a part of a larger plan to assess all strategic options, including perhaps selling the business’s assets and operations as a continuing concern. The business is certain that this procedure will provide a clear and value-maximizing route for the gain of its stakeholders and clientele.

The current Prime Trust incident serves as a stark reminder of the complex difficulties encountered by businesses engaged in the quickly developing rypto custody sector. Additionally, it emphasises the significance of regulatory compliance and possible hazards related to the developing bitcoin industry.

The restructuring website for Prime Trust or PACER both provide further information about the court-supervised processes. The issue is still in flux, and how the legal processes turn out will probably have a big impact on Prime Trust’s customers, stakeholders, and the larger digital asset market.

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