By
Steve Muchoki
April 19th, 2024
Bittrex has been asking the SEC for clarity as to which digital assets on the platform constitute a security, however, it received no response from the agency.
Seattle-based crypto exchange Bittrex is the latest to face the US Securities and Exchange Commission (SEC) lawsuit over allegations of violating federal laws. On Monday, April 17, SEC charged crypto exchange Bittrex along with cofounder William Shihara for operating an unregistered securities exchange, a clearing agency, and a broker.
In the press release from SEC on Monday, the securities regulator accused Bittrex of working with crypto issuers to “delete problematic statements” for avoiding regulatory scrutiny. As a result, the SEC complaint seeks penalties, disgorgement, and permanent injunctions against the defendants in a jury trial.
Commenting on the development, SEC Enforcement Director Gurbir Grewal said that the lawsuit against crypto exchange Bittrex will set an example for other non-compliant crypto market players. He added:
“As laid out in our complaint, Bittrex’s business model was based on three things: circumventing the registration requirements of the federal securities laws; counseling issuers of crypto asset securities to do the same by altering their offering materials; and combining multiple market intermediary functions under one roof to maximize profits.”
“Today’s action not only holds Bittrex accountable for misconduct that we allege put investors at risk, but should also send a message to other non-compliant crypto market intermediaries to follow the federal securities laws or be held accountable for their violations.”
Bittrex’s Response and US Exit Plans
Last month in March 2023, crypto exchange Bittrex received the Well Notice from the SEC and was already expecting a potential action. Soon after that, crypto exchange Bittrex announced its plans of withdrawing its operations from the US market citing the uncertainty in the US regulatory and economic environment.
After yesterday’s development, crypto exchange Bittrex released a statement noting:
“We are disappointed with the SEC’s decision to bring an enforcement action against Bittrex. For over five years, […] the SEC would not provide notice of the specific conduct that it thought violated the federal securities laws. Specifically, on multiple occasions, we asked them to tell us what digital assets on our platform they viewed as securities, so that we could review and potentially delist them. They refused to do so.”
It further added that the SEC action could have a “chilling effect” on the crypto industry in the US. Now, the crypto industry is anticipating SEC’s next action on the crypto exchange Coinbase which also received a Wells Notice last month.