Chapter 11 bankruptcy

Digital currency trader blocked from bankruptcy filing by SEC action

Getting your Trinity Audio player ready...

An Idaho-based digital currency trader has been prevented from filing for Chapter 11 bankruptcy due to the terms of a court order secured against him by the U.S. Securities and Exchange Commission (SEC).

Shawn Cutting of Crypto Traders Management LLC, and the company as an entity, were prevented from filing for bankruptcy due to the terms of the restraining order, and an injunction which explicitly outlawed filing for bankruptcy protection.

The restraining order freezes the assets of Cutting and the company, following an enforcement suit brought by the U.S. regulator accusing Cutting of selling unregistered securities, and misappropriation of investor funds.

Due to a lack of information about the defendants’ financial position, the court agreed to a settlement which implemented an agreement that bankruptcy proceedings would be prohibited.

“The court does not have sufficient information about defendants’ financial condition or any intervening change of circumstances that establish defendants should be relieved from the [temporary restraining order] issued by the court or the bargained-for agreement in which the defendants agreed to forego their right to file bankruptcy.”

The judge also denied Cutting’s request to have two further claims against him quashed, in an action instigated by two investors who said they had been “conned” into investing, in the amount of $730,000.

Cutting had requested permission to sell two properties in his ownership in order to meet the claim, which was ultimately denied by the court in the interim.

“Defendants have not alleged here that the writ was improperly or irregularly issued, or filed a written undertaking with the court to require the return of the lots. Further, defendants have not cited, and the court has not located, any other grounds upon which the court may modify the writ of attachment to release the lots for sale.”

The case alleges Cutting to have raised some $7 million from investors by claiming to have expertise in investing in digital assets he did not in reality possess.

Watch: SEC Commissioner Hester Peirce on Bitcoin Association’s Blockchain Policy Matters

YouTube video

New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.