As Bittrex is ready to quit providing services in the United States, the U.S. Securities and Exchange Commission has complained about the Seattle-based exchange.
The former CEO and co-founder of Bittrex, William Shihara, has accused the U.S. Securities and Exchange Commission (SEC) of running an unlicensed national securities exchange, broker, and clearing agency. Separate charges were brought by the agency against Bittrex Global.
In the Western District of Washington U.S. District Court, the SEC accuses the corporations and Shihara of violating the Exchange Act on four counts. Further charges are being brought against Bittrex Global “in connection with its operation of a single shared order book alongside Bittrex.”
The OMG, Dash, Algorand, Monolith (TKN), Naga (NGC), and IHT Real Estate Protocol (IHT) tokens sold on the exchange, according to the SEC’s complaint, are securities. The SEC has come under fire in the past for its “regulation by enforcement” strategy, which claims tokens are securities only when it files complaints against them and not before.
Today we charged crypto asset trading platform Bittrex Inc. and its co-founder and former CEO William Shihara for operating an unregistered national securities exchange, broker, and clearing agency.https://t.co/kBsIFMp7ZA— U.S. Securities and Exchange Commission (@SECGov) April 17, 2023
Additionally, according to the agency, the exchange and Shihara urged clients to remove “problematic statements” to escape legal attention. In a jury trial, the SEC lawsuit asks for disgorgement, fines, and long-term injunctions against the defendants. In a statement, Gurbir Grewal, director of the SEC Enforcement Division, said:
“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 got a Wells notification in March alerting it to the forthcoming SEC action, which it had anticipated. Due to the regulatory climate, the exchange previously made known its decision to cease U.S. operations on April 30.
In a statement, Bittrex claimed, among other things:
“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.”
In October, Bittrex was accused of breaking the Bank Secrecy Act and breaching sanctions programs by the Office of Foreign Assets Control and Financial Crimes Enforcement Network of the United States Treasury.