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It is becoming a trend that the SEC is choosing enforcement actions over dialogue.
The United States-based digital currency trading platform Bittrex is likely the next exchange to face enforcement actions from the Securities and Exchange Commission (SEC). According to a report by the Wall Street Journal, the trading platform has received a Wells Notice from the regulator for key aspects of its operations within the country.
According to the notice which is typically issued before enforcement action is initiated, Bittrex operated in the United States as an exchange, broker-dealer, and clearinghouse without registering with the regulator. Speaking about the move from the SEC, Bittrex’s General Counsel, David Maria revealed that the notice came in March and that the trading platform has been making moves to converse with the SEC.
Bittrex met with the SEC, according to David, back in October last year to know what it might take to register its business as a regulated entity in the country. When the SEC listed the requirements, meeting the demands will entail forfeiting most of its revenue-generating businesses in the country and that appears a farfetched solution.
In his and the exchange’s defense, the lack of a clear regulatory framework accounts for why the trading platform could not meet up with the demands coming from the regulator.
“The lack of regulatory clarity here results in substantial costs and no certainty as to what can and can’t be offered,” he said.
While it remains unclear whether the SEC, under Chairman Gary Gensler will pursue the said enforcement action, however, if it does, Bittrex is ready to take a reasonable settlement deal according to Attorney David.
According to him, the exchange may have to litigate if it gets to that, and as such will pitch it against other prominent players with a legal brawl with the SEC over the past few years.
Bittrex to Join Other SEC Preys Like Kraken
From several indications, it appears as though Bittrex will join the likes of Ripple Labs, Kraken exchange, and even Paxos Trust that the SEC has cracked down against over the past couple of months.
The regulator’s case with Kraken was that it was offering unregistered staking products and services, and in the settlement, the exchange paid the sum of $30 million as fine. The story of Paxos Trust involves the firm’s issuance of the Binance USD (BUSD) token which the regulator posited was marketed as a security.
It is becoming a trend that the SEC is choosing enforcement actions over dialogue, a trend that appears to be unnerving other students facing similar challenges.
There has been continuous calls for the United States government to reign in the approach of the SEC and allow thoughtful and progressive innovations in the country across the board. These innovations will also largely cut across the blockchain ecosystem.