SEC may take action against the US cryptocurrency exchange Bittrex

Despite planning to close down its local operations, the cryptocurrency exchange Bittrex, which is located in the US, is facing potential action from the US securities regulator.

U.S. SEC charges Crypto Asset Trading Platform Bittrex and its Former CEO

The U.S. Securities and Exchange Commission recently declared that it was filing charges against cryptocurrency exchange Bittrex and former CEO William Shihara for allegedly running an unregistered national securities exchange, broker, and clearing agency. The SEC is also suing Bittrex Global, Bittrex’s foreign partner, for failing to file paperwork to become a national securities exchange.

The SEC alleged in its lawsuit that Bittrex facilitated the ability to buy and sell cryptocurrencies including OMG, DASH, ALGO, TKN, NGC, and IHT, which the agency views as securities.

The SEC claims that Bittrex and Shihara urged the teams behind these cryptocurrencies to remove “problematic statements” they had previously made in public that they thought may attract the attention of a regulatory body like the SEC itself. Before the assets could be listed on Bittrex, it was ordered that any price forecasts, profit expectations, and other investment-related words be removed.

SEC Chair Gary Gensler said, “This Action, once again, makes obvious that the crypto markets suffer from a lack of regulatory compliance, not a lack of legal clarity. As stated in our complaint, Bittrex and the issuers it worked with were aware of the regulations that applied to them but went to great lengths to circumvent them by instructing issuer-applicants to ‘scrub’ any information in their offering materials that might have suggested that particular crypto assets were securities.”

Since its 2014 start, Bittrex grew to rank among the top 50 cryptocurrency exchanges globally. The firm produced $1.3 billion in sales between 2017 and 2022, according to the SEC. From the beginning of the business until 2019, Shihara, one of the original co-founders, served as CEO.

After receiving the Wells Notification, Bittrex responds

According to a Wall Street Journal article published on April 16, Bittrex’s general counsel David Maria allegedly stated that the enforcement team alerted him of possible SEC action in March. The Seattle-based cryptocurrency company had already begun the process of closing down its U.S. operations by that point, the lawyer claimed.

The SEC stated in the notice of prospective enforcement action, or “Wells notice,” that Bittrex had broken the law by operating as an exchange, broker-dealer, and clearinghouse without first registering with the watchdog.

The business explored how to register its activities with the SEC in late 2022, according to Bittrex’s general counsel. The cryptocurrency company discovered that it had no choice except to stop all of its revenue-generating operations in the nation to comply with the SEC’s regulations.

Attorney Maria emphasized that Bittrex’s inability to adhere to SEC standards was caused by the agency’s initial failure to establish clear regulations for cryptocurrencies. He claimed, “The lack of regulatory clarity here results in substantial costs and no certainty as to what can and can’t be offered.”

Maria explained that since the business is ceasing operations in the US, Bittrex is unsure if the SEC would bring a lawsuit. Unless regulators “came with a reasonable settlement offer,” the attorney allegedly stated, Bittrex will go to court if the agency decided to take action.

The announcement by Bittrex to cease all operations in the United States on March 31 was followed quickly by the press, which cited the difficult regulatory and economic climate. By April 30, 2023, the exchange encouraged US clients to remove their money.

In its response to the legal lawsuit, Bittrex Global stated that it never transacted with Americans and had “taken efforts” to prevent them from utilizing the exchange. Also, the SEC was criticized for not attempting to contact the company before filing a lawsuit. As we do with other regulators, Bittrex Global was ready to cooperate with the SEC positively to communicate our stance. That the SEC is not interested in such negotiations has been very evident.

Bittrex had several domestic problems before deciding to depart the country. Bittrex agreed to settle fines with the Office of Foreign Assets Control and Financial Crimes Enforcement Network of the U.S. Department of the Treasury in 2022 totaling more than $29 million. Between 2014 and 2017, the Crimean Peninsula, Cuba, Iran, Sudan, and Syria all violated sanctions. This settlement relates to such violations.

I am Vishal. I post articles about the cryptocurrency markets. I'm pursuing a BBA degree. My home is in Navi Mumbai, Maharashtra.I'm constantly interested in new advancements in this industry and I learn something new about it every day. I would love to share such information with you all.

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