There's a no right/win situation in for Bittrex. Whatever decision they make - which isn't returning the funds - they will get bashed by some side. There may be both operational and even legal repercussions for them if they opt for any "favorable decision".

As far as I know, they didn't offer nor ask to become arbitrator here. An obvious desire not to be dragged into having to make any decisions, which will be read by people as making judgments, should not affect your trust in them and their operations.