Bittrex Believes There Are Incorrect KYC, AML and OFAC Facts in the Denial of BitLicense

Today, the New York Department of Financial Services (NYDFS) chose to deny the application of crypto exchange Bittrex for a BitLicense in the state. The NYDFS released a long report that outlined all of the reasons that they chose not to approve Bittrex, which means that the exchange will not be allowed to conduct cryptocurrency-related activity in New York. However, responding to the decision, Bittrex does not believe that the reasons provided by the NYDFS are actually truthful.

There are many claims that the NYDFS made for their reasons, primarily claiming that the exchange did not have the right policies in place for anti-money laundering (AML), know your customer (KYC), and the Office of Foreign Assets Control (OFAC) procedures. Clearly, Bittrex was not happy with the results of their wait, which has been going on since submitting the application in 2015. They said that, by denying the application, they were harming the customers of New York, rather than defending them against the platform. They added that the claims against their practices for AML/KYC were inaccurate as well.

Instead, Bittrex stated that they have

“a risk assessment framework, approved by outside counsel.”

The company further stated that the AML policies are part of the training for all employees and that all new customer accounts are screened for “SDNs” (specially designated nationals), which are then tracked for updates with OFAC.

Furthermore, Bittrex had a major problem with the capitalization requirements placed against them, saying that no other state has such high requirements. The prerequisites are created with a pre-existing hot wallet versus cold wallet storage equation. As such, they do not consider the substantial range of coins that Bittrex offers, which is well over 200 cryptocurrencies. Bittrex alleges that the company is ignoring how dangerous it can be to move assets continually from hot to cold storage.

Though rejected, Bittrex said that they had offered up a bond that would ultimately cover the capitalization for every client they held in New York. In the letter that Bittrex received from NYDFS, the exchange added that there were multiple incorrect statements about their operations, including the way that they implemented policies for checking customers, transaction monitoring and more.

Presently, as far as digital currency exchanges, Bittrex falls just outside of the top 50 platforms at #54, according to data with CoinMarketCap.