Cryptocurrency exchange Bittrex and its former CEO William Shihara have agreed to settle charges brought to them by the United States Securities and Exchange Commission (SEC). The SEC accused Bittrex of running an unregistered exchange.
Bittrex and Bittrex Global have agreed to pay a total of $24 million. This amount includes returning $14.4 million that Bittrex earned, adding $4 million in interest, and a further fine of $5.6 million.
What Were the SEC’s Allegations Against Bittrex?
The SEC claims that Bittrex acted as an unregistered broker, exchange, and clearing agency. It claimed that the exchange offered and sold securities without being registered as a national securities exchange.
Bittrex and Shihara were further accused of directing crypto asset issuers to delete certain statements online. Particularly words that may catch the attention of the SEC. Bittrex allegedly did this before the assets were available for trading on the exchange.
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, pointed out in an Aug. 10 statement that the way a crypto asset is promoted does not determine whether it is a security or not:
“Today’s settlement makes clear that you cannot escape liability by simply changing labels or altering descriptions because what matters is the economic realities of those offerings. I am grateful to the SEC staff for aggressively pursuing non-compliance in the crypto industry, resolving this matter, and bringing additional relief to harmed investors.”
Despite settling with the SEC, Bittrex neither “admit nor deny the SEC’s allegations.”
Pending court approval, Bittrex and Shihara will be permanently forbidden from breaking certain securities laws.
To learn more about how the SEC determines what is classified as a security, read more here: What Is the Howey Test and How Does It Impact Crypto?
Bittrex’s Timeline Of Events In 2023
The SEC initially filed this complaint against Bittrex on April 17. The filing came shortly after Bittrex announced that it would halt US operations on March 31.
Bittrex US suspended its operations on April 30. It then proceeded to file for Chapter 11 bankruptcy on May 8. The bankruptcy filing has no bearing on the ongoing operations of Bittrex Global.
This comes after the SEC announced its strong intention to fight Ripple’s recent partial legal win on Aug. 9. On July 13, Judge Torres revealed that Ripple’s native token, XRP, is not a security when sold to retail investors — a partial win for Ripple.
The SEC doesn’t agree with this and wants to challenge it because it could negatively influence its other pending cases. The SEC has litigations in progress against crypto exchanges Binance and Coinbase.
In its efforts to have the case against the SEC dismissed, Coinbase has referenced Ripple’s ruling a total of thirteen times.
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