Seattle-based crypto asset trading platform Bittrex has been charged by the United States Securities and Exchange Commission (SEC) for operating an unregistered national securities exchange, broker, and clearing agency.
The United States Securities and Exchange Commission (SEC) has recently filed a complaint against the Seattle-based crypto asset trading platform Bittrex, as well as its co-founder and former CEO William Shihara. The SEC alleges that Bittrex had been operating an unregistered national securities exchange, broker, and clearing agency.
The agency has also filed a separate charge against Bittrex Global. The charges consist of four violations of the Exchange Act against the companies and Shihara in the U.S. District Court Western District of Washington. Additionally, Bittrex Global is being charged in connection with its operation of a single shared order book along with Bittrex.
The SEC argued in its complaint that six tokens traded on Bittrex, namely OMG, Dash, Algorand, Monolith, Naga, and IHT Real Estate Protocol, are securities. This has been criticized in the past as a form of “regulation by enforcement,” where the SEC only claims tokens to be securities at the time when it files such complaints, and not prior.
Furthermore, the SEC claims that Bittrex and Shihara advised clients to delete “problematic statements” to avoid regulatory scrutiny. The SEC complaint sought disgorgement, penalties, and permanent injunctions against the defendants in a jury trial.
SEC enforcement division director Gurbir Grewal stated that “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.”
Bittrex had reportedly received a Wells Notice warning of the impending action in March and was expecting the SEC action. The exchange had already announced its intention to close down its U.S. operations on April 30 due to the regulatory environment.
In response to the charges, Bittrex released a statement stating that “For over five years, […] 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.”
It is worth noting that Bittrex was previously hit with charges from the U.S. Treasury’s Office of Foreign Assets Control and Financial Crimes Enforcement Network in October for violating sanctions programs and the Bank Secrecy Act.