SEC Slaps Lawsuit on Crypto Exchange Bittrex for Violating Securities Regulations, Coinbase Next?
On Monday, April 17, the U.S. Securities and Exchange Commission (SEC) charged crypto exchange Bittrex and its co-founder William Shihara for operating the platform as an unregistered national securities exchange, clearing agency, and broker.
As a result, the US SEC has slapped four major charges of Exchange Violation Act against the Bittrex group of companies and its co-founder in the U.S. District Court Western District of Washington. They have filed separate charges on Bittrex Global “in connection with its operation of a single shared order book along with Bittrex.”
In its complain, the SEC has clearly mentioned that tokens such as OMG, Dash, Monolith (TKN), Naga (NGC), Algorand, and IHT Real Estate Protocol (IHT) tokens, traded on the Bittrex exchange as unregistered securities.
The securities regulator stated that crypto exchange Bittrex worked with crypto issuers to delete “problematic statements” in order to avoid regulatory scrutiny. As a result, the SEC seeks disgorgement, penalties and permanent injunction, against crypto exchange Bittrex.
Speaking on the development, Enforcement Division Director Gurbir Grewal said that the lawsuit should serve as a message to other non-compliant crypto market intermediaries.
He added: "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. Today’s action not only holds Bittrex accountable for misconduct that we allege put investors at risk, but should also send a message to other non-compliant crypto market intermediaries to follow the federal securities laws or be held accountable for their violations.”
Last month, the US SEC had already served a Wells Notice to crypto exchange Bittrex stating that they have found evidence of legal violations. Soon after the U.S. SEC announced its plans to exit the US market citing lack of regulatory clarity.
After yesterday’s lawsuit, crypto exchange Bittrex has released a statement adding: “We are disappointed with the SEC’s decision to bring an enforcement action against Bittrex. For over five years, and despite multiple, specific requests to do so, the SEC would not provide notice of the specific conduct that it thought violated the federal securities laws. Specifically, on multiple occasions, we asked them to tell us what digital assets on our platform they viewed as securities, so that we could review and potentially delist them. They refused to do so. Bittrex operated within the parameters of the law at all times, and we look forward to vindicating our position in court”.