Bermudan Court Ruling Sets Precedent for Crypto Exchanges

A recent court ruling in Bermuda has provided valuable insights into how crypto exchanges should handle customer assets.

The decision, known as Re Bittrex, was handed down by the Bermudan Court of Appeal and sets a precedent for how exchanges worldwide should operate.

In this case, Bittrex, a cryptocurrency exchange based in Bermuda, was facing insolvency. The company's directors had decided to wind up the business due to lack of profitability, leaving behind almost 250,000 account holders with small balances.

The court ruled that customer assets held by Bittrex were not owned by the company and could not be distributed to shareholders as a surplus.

This decision is significant because it emphasizes that regulatory protections will prevail over contractual arrangements. In other words, exchanges cannot contract out of regulatory obligations and must segregate customer assets from their own.