It appears that SEC has chosen a new target.
Bittrex, the United States-based cryptocurrency exchange, is allegedly facing a lawsuit from the US Securities and Exchange Commission (SEC).
According to The Wall Street Journal report shared on April 16th, the SEC's enforcement division has shown an inclination to recommend suing Bittrex over alleged investor protection violations.
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Bittrex's general counsel, David Maria, reportedly revealed that the company was informed of the possible action in March. According to David Maria, during that time, the firm had already initiated the process of sunsetting operations in the United States.
In the Wells notice, a notification of potential enforcement action, the SEC claimed that Bittrex had breached laws by operating as an exchange, broker-dealer, and clearinghouse without registering with the regulator.
Bittrex's general counsel stated that in late 2022, the company held discussions with the SEC about registering their operations but found no viable way to comply with SEC rules without ending all revenue-generating activities in the US.
Maria emphasized that Bittrex's non-compliance was primarily due to the SEC's failure to provide clear regulations for cryptocurrencies. Bittrex's general counsel reportedly noted:
The lack of regulatory clarity here results in substantial costs and no certainty as to what can and can't be offered.
As Bittrex winds down its operations in the US, the company remains uncertain whether the SEC will pursue a lawsuit.
The news follows Bittrex's March 31st announcement revealing that it would discontinue all operations in the United States due to the challenging regulatory and economic environment, urging US customers to withdraw their funds by April 30th, 2023.
It is worth noting that Bittrex is not the only crypto exchange that has received SEC's Wells Notice. At the end of March, crypto exchange Coinbase received a Wells Notice over securities law violations.