US SEC presses official charges against Bittrex and its co-founder.
The US Securities and Exchange Commission (SEC), an independent agency of the United States federal government enforcing the law against market manipulation, is taking crypto trading platform Bittrex and its co-founder William Shihara to court.
According to the official announcement shared by SEC on April 17th, SEC filed the complaint in the US District Court Western District of Washington and charged Bittrex for operating an unregistered securities exchange, broker, and clearing agency.
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It is worth noting that SEC also charged Bittrex Global "for failing to register as a national securities exchange." On top of that, Bittrex Global is under scrutiny for operating a single shared order book alongside Bittrex.
In its filing, SEC claimed that OMG, Dash (DASH), Algorand (ALGO), Monolith (TKN), Naga (NGC), and IHT Real Estate Protocol (IHT) tokens are securities. It is worth highlighting that industry players often accuse SEC of practicing "regulation by enforcement" by labeling tokens as securities only when filing such complaints without prior notice.
According to the SEC, Bittrex and Shihara advised clients to remove "problematic statements" to dodge regulatory attention.
The agency is seeking penalties, disgorgement, and permanent injunctions. SEC Enforcement Division Director Gurbir Grewal stated:
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.
It is worth noting that the news about possible legal actions from SEC towards Bittrex broke on April 16th.
Bittrex reportedly received a Wells notice in March, alerting them of the impending SEC action. The exchange had previously announced plans to shut down US operations on April 30th due to the regulatory climate.
In response to the charges, Bittrex released a statement noting:
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 also received charges from the US Treasury's Office of Foreign Assets Control and Financial Crimes Enforcement Network for violating sanctions programs and the Bank Secrecy Act.
The SEC's charges against Bittrex highlight the agency's ongoing effort to enforce federal securities laws within the crypto industry. SEC has also targeted crypto firms like Coinbase, Kraken, Ripple, and Paxos.