The United States SEC has filed a lawsuit against crypto exchange Bittrex over violation of federal laws.
The regulator has alleged that the exchange operated an Unregistered Exchange, Broker, and Clearing Agency
The crypto exchange’s former CEO and its foreign affiliate Bittrex Global GmbH.
The exchange previously announced its plans to exit the American market by the end of April 2023.
The U.S. Securities and Exchange Commission has initiated enforcement action against Seattle-based crypto exchange Bittrex. The securities regulator’s lawsuit named the exchange’s former chief executive Bill Shihara, as well as its foreign affiliate Bittrex Global GmbH. The lawsuit comes more than two weeks after the exchange announced that it was winding down its business in the U.S. due to a lack of regulatory clarity.
SEC: Bittrex failed to register as a national exchange
According to a press release from the SEC earlier today, Bittrex and former CEO Bill Shihara have been charged with operating an unregistered national securities exchange, broker, and clearing agency. The exchange’s foreign affiliate has been charged with failing to register as a national securities exchange in connection with its operation of a single shared order book along with Bittrex. The SEC’s complaint alleged that since 2014, the exchange facilitated the buying and selling of assets that the regulator deemed were securities.
The complaint further alleged that between 2017 and 2022, the crypto exchange generated at least $1.3 billion in revenues through transaction fees from investors while offering services as a broker, exchange, and clearing agency without registering any of these activities with the securities regulator. Furthermore, the SEC alleged that the former CEO worked with crypto asset issuers to scrub “problematic statements” from their offering materials so as to not attract attention from regulators.
Today’s action, yet again, makes plain that the crypto markets suffer from a lack of regulatory compliance, not a lack of regulatory clarity. Today we’re holding Bittrex accountable for its non-compliance.”
Gary Gensler, Chairman of the SEC
Speaking on the lawsuit, Gurbir Grewal, Director of the SEC’s Division of Enforcement, alleged that Bittrex repeatedly chose profits at the expense of investor protection. According to him, the exchange’s business model was based on 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.