The SEC Has Filed A Lawsuit Against Bittrex, Its Co-founder And Former CEO, And Its Foreign Affiliate
Earlier this year, Bittrex shut down its U.S. operations, stating that the regulatory environment was challenging.
Because Bitcoin
April 17, 2023
Bittrex, a cryptocurrency trading platform, and its co-founder and former CEO William Shihara have been charged by the Securities and Exchange Commission (SEC) for operating an unregistered securities exchange, broker, and clearing agency. The SEC also charged Bittrex's foreign affiliate, Bittrex Global GmbH, for failing to register as a national securities exchange.
The complaint alleges that Bittrex facilitated the buying and selling of securities, earning at least $1.3 billion in revenue from 2017 to 2022, without registering these activities with the SEC. The complaint also alleges that Bittrex and Shihara coordinated with issuers to delete "problematic statements" from public channels to avoid regulatory scrutiny. SEC Chair Gary Gensler stated that the lack of regulatory compliance, not clarity, is the issue with the crypto markets. The SEC's complaint was filed in the US District Court for the Western District of Washington.
According to Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, "We assert that Bittrex prioritized profits over safeguarding investors. Bittrex's business approach, as outlined in our complaint, was predicated on three things: evading the registration requirements of federal securities laws, advising issuers of crypto asset securities to do the same by altering their offering materials, and merging multiple market intermediary functions to maximize profits. Today's move not only holds Bittrex responsible for misconduct that we claim endangered investors, but it should also serve as a warning to other non-compliant crypto market intermediaries to comply with federal securities laws or face the consequences of their violations."
Last month, Bittrex announced the closure of its U.S. operations, with CEO Richie Lai citing the unclear and unevenly enforced regulatory requirements as the reason for the decision. However, SEC Chair Gary Gensler believes that existing U.S. regulations cover digital asset exchanges, and the agency's complaint against Bittrex alleges that the platform traded tokens that the SEC considers securities, such as DASH, OMG, and AGLO. Gensler emphasized that the lack of compliance, rather than regulatory clarity, is the issue in the crypto markets.
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