Hassan Maishera
TL;DR
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The US SEC has accused Bittrex of operating a national securities exchange, broker and clearing agency in violation of federal statutes.
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The crypto exchange had already announced its decision to exit the US market by the end of April.
SEC Accuses Bittrex Of Violating Federal Laws
The United States Securities and Exchange Commission has filed a lawsuit against the cryptocurrency exchange Bittrex for simultaneously operating a national securities exchange, broker and clearing agency in violation of federal statutes.
According to the lawsuit, former CEO Bill Shihara and Bittrex Global GmbH are also facing charges.
In a press release on Monday, the regulatory agency said the crypto exchange worked with crypto issuers to delete problematic statements that the SEC would look into. Some of the deleted statements include price predictions and statements implying an "expectation of profit."
The SEC wrote;
“Since at least 2014, Bittrex has held itself out as a platform that facilitated buying and selling of crypto assets that the SEC’s complaint alleges were offered and sold as securities. From 2017 through 2022, Bittrex earned at least $1.3 billion in revenues from, among other things, transaction fees from investors, including U.S. investors, while servicing them as a broker, exchange, and clearing agency without registering any of these activities with the Commission.”
The SEC added that Bittrex should have registered as a crypto exchange, clerking agency and broker since it provided all three services to its clients.
SEC Enforcement Director Gurbir Grewal pointed out that the lawsuit against Bittrex should serve as a message to other crypto companies that are not compliant with regulations. He said;
"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.”
This latest development comes a few weeks after Bittrex announced its planned exit from the United States market by the end of April. At the time, Bittrex cited the negative regulatory and economic environment in the US as the reason behind its exit.
Bittrex’s general counsel David Maria said the company intends to fight the lawsuit unless the regulatory agency provides a reasonable settlement offer.
The SEC has been coming after cryptocurrency exchanges in recent months. Kraken, one of the leading crypto exchanges in the United States, had to settle with the SEC after the regulatory agency looked into some of its services.
The SEC also served a Wells Notice to Coinbase, informing the crypto exchange that it is looking into Coinbase’s services to see if there is a violation.
Bittrex pointed out that according to the SEC, Omise go (OMG), Algorand (ALGO), Dash (DASH), Tokencard (TKN), i-house token (IHT) and Naga (NGC) are securities.
