December 11, 2023

The SEC on Monday accused cryptocurrency exchange Bittrex of operating as an unregistered stock exchange, broker-dealer and clearinghouse.

SEC Charges Cryptocurrency Exchange Bittrex and Its Former CEO William Shihara for Operating an Illegal Stock Exchange, Broker-Dealer, and Clearinghouse, WSJ Report.

this mechanism It also accused Bittrex’s foreign subsidiary, Bittrex Global GmbH, of “failing to register as a national securities exchange.”The lawsuit comes amid news that the exchange received wales notification from the agency.The Notice Comes Even as Bittrex Prepares to Shut Down U.S. Operations

According to David Maria, Bittrex’s general counsel, the exchange received Wells’ notice from the SEC’s Enforcement Division in March. A Wells Notice is a formal notice issued by the SEC that the agency is considering legal action against an entity or person.

Bittrex to Shut Down US Operations

The exchange announced last month that it planned to discontinue services in the United States due to economic and regulatory concerns. The company advises customers to withdraw funds by April 30, 2023.

Maria said Bittrex discussed with the agency how to register its business by the end of 2022.According to lawyers, the exchange cannot comply with the SEC unless it essentially ceases all revenue-generating services in the U.S.

Bittrex was unable to comply with the SEC’s failure to provide clear guidelines for cryptocurrencies in the first place, Maria said.

The lack of clear regulation here leads to significant costs and uncertainty about what can and cannot be provided.

SEC Officially Charges Bittrex

according to ReutersAccording to the SEC, Shihara coordinated with issuers of crypto assets that wanted to make their tokens available for trading to remove “problematic representations” that Shihara believed would lead regulators to investigate the tokens as securities. The agency said:

For example, to avoid regulatory scrutiny, Bittrex and Shihara directed the issuer-applicant to remove statements related to “price forecasts,” “profit expectations,” and other “investment-related provisions” before Bittrex offered assets on its platform.

The SEC further alleges that from 2017 to 2022, the exchange earned more than $130,000 in trading fees from investors while operating as a broker, exchange, and clearinghouse without the necessary registration with the agency. million dollars in revenue.

SEC Chairman Gary Gensler said in a statement:

Today’s action once again demonstrates a lack of regulatory compliance in the crypto market, not a lack of regulatory transparency.

He added:

As we allege in our complaint, Bittrex and the issuers it works with are aware of the rules that apply to them, but go to great lengths to circumvent it by instructing the issuer-applicant to “erased” informational material that would indicate that certain cryptoassets are securities these rules.

Additionally, Bittrex allegedly failed to register as an exchange, broker-dealer, and clearinghouse and comply with U.S. securities laws. The apparent changes do not change the fundamental economic realities of the product and Bittrex’s behavior. Today, we are holding Bittrex accountable for its breach.

Disclaimer: This article is for informational purposes only. It does not provide or be intended to be used as legal, tax, investment, financial or other advice.