Bittrex, a major United States cryptocurrency exchange based in Seattle and established in 2013, has been forced to close its New York business due to the rejection of its BitLicense application by the New York Department of Financial Services (NYDFS) on April 11, 2019.
Here is why:
Bittrex Failed To Comply With Regulatory and Legal Compliances
According to the official documents released by the New York State Financial Services Authority, Bittrex failed to adhere to all of the listed legal and regulatory compliance requirements.
The areas in which Bittrex fell short was a lack of compliance with AML (anti-money laundering) law, as well as lack of due diligence and control related to virtual currency listing and product implementation.
Also, Bittrex failed to adequately control and monitor suspicious transactions, due to their lack of training and poor hiring of staff.
An excerpt from the DFS’s documents reads:
“The severity of the deficiencies in Bittrex’s BSA/AML/OFAC compliance program is indicative of a lack of a comprehensive training program. The Department’s concern regarding the lack of training is compounded as recent hires within the compliance team do not have the requisite BSA/AML/OFAC knowledge or expertise.”
Additionally, Bittrex failed to collect the necessary documents for token examination upon listing tokens on the exchange. According to the DFS, Bittrex even listed certain tokens without requiring them to submit any documents.
Bittrex Doesn’t Agree With DFS Requirements and Licensing Process
However, in response to the DFS’s claims, Bittrex says their screening criteria are too strict to handle many cryptocurrencies. Stating that according to the DFS’s requirements, the exchange would only be allowed to list 10 of their 200 plus cryptocurrencies.
Bittrex said in a statement:
“This would have prohibited Bittrex from listing coins that are offered to New York residents by other BitLicensees. NYDFS reserved the right to order us to withdraw coins at any time. Additionally, DFS would be able to prohibit offering tokens to NY residents, even if other NY BitLicense holders were able to offer the tokens.”
All in all, it is well known that the New York State’s BitLicense is very difficult to obtain, due to New York being a global financial hub.
Do you think Bittrex will address their AML and token listing issues and reapply for the New York BitLicense? Let us know what you think in the comment section below.