In a letter released to the public on April 10, 2019, New York’s Department of Financial Services (DFS) denied Bittrex’s two separate applications to engage in a virtual currency business and to engage in money transmission activity in New York state. The action came after an extended trial period in which DFS sought to “address continued deficiencies and assist Bittrex in developing appropriate controls and compliance programs commensurate with the evolving nature of the sector.”
In denying the applications, DFS cited numerous deficiencies in Bittrex’s anti-money laundering compliance system, including inadequate internal controls, lack of a qualified compliance officer, lack of adequate training for employees, inadequate independent testing, and inadequate due diligence. DFS further cited Bittrex’s lack of adequate due diligence in launching tokens and other products and insufficient regulatory capital.
DFS ordered Bittrex to cease operating immediately in New York and doing business with New York residents. It provided Bittrex 60 days to wind down in business with existing New York customers, including transferring positions or transactions and providing for safe custody of assets.