SEC Sues Bittrex After Leaving the USA Market?!

The US Securities and Exchange Commission (SEC) has filed charges against cryptocurrency exchange Bittrex and its founder and former CEO, William Shihara, for violating US federal securities law registration requirements by operating as a national securities exchange, broker, and clearing agency without any formal registration. According to the SEC, Bittrex instructed crypto issuers using its platform to delete information indicating their digital assets were securities and ran different market intermediary functions under one entity to maximise profits. The regulator also charged Bittrex Global GmbH, the digital asset firm's foreign affiliate, with operating a single shared order book without registering as a national securities exchange.

The SEC's lawsuit, which was filed in the US District Court for the Western District of Washington, states that Bittrex has allowed the buying and trading of cryptocurrencies advertised as securities on its platform since at least 2014. Between 2017 and 2022, the cryptocurrency generated over $1.3 billion in revenue while acting as a broker, exchange, and clearing agency for its clients. However, the SEC stated that neither of Bittrex's concurrent services was registered.

The financial watchdog stated that Bittrex and Bittrex Global should have registered as brokers since they integrated several buy-and-sell securities orders through a central system. On the other hand, the platform should have registered as a broker because it frequently participated in completing transactions in crypto assets that were offered and sold as securities for the accounts of others. Furthermore, the regulator noted that Bittrex should have applied for clearing agency registration because it facilitated payments and delivery after matching buy and sell orders. In addition, operating as a custodian of digital assets necessitated clearing agency registration.

Richie Lai, Co-Founder and CEO of Bittrex responded to the news, stating that the cryptocurrency exchange had worked with the SEC for years on what constituted securities. He criticised the SEC's move, stating that it should not have reacted in this manner, especially after the closure notice, and added that Bittrex would file a legal challenge to the SEC's move. Later that day, Bittrex issued a statement stating that securities were neither sold nor traded on its platform nor did the exchange offer any investment contracts. The firm also claimed that the regulator failed to inform the exchange which of its specific actions violated federal securities legislation, despite having made such a request for over five years.

The SEC's move against Bittrex comes less than a month after the CFT charged Binance and CEO Changpeng Zhao with operating an illegal digital asset derivatives exchange. The regulator also charged Binance with insider trading and market manipulation, which Zhao characterised as an insufficient presentation of facts. The SEC also places regulatory pressure on other cryptocurrency exchanges and digital asset lenders in the US, including Coinbase, Kraken, Gemini, and Genesis, stressing that their crypto offers are unregistered securities.

Meanwhile, Bittrex has withdrawn from many nations this year, citing regulatory reasons. The cryptocurrency exchange left seven countries in 2020, including Belarus and Ukraine. A year ago, the company ceased operations in 31 nations, including Afghanistan, Egypt, and Trinidad & Tobago.