[NEWS] U.S. SEC files lawsuit against cryptocurrency exchange Bittrex for operating an unregistered exchange

On the 17th, the U.S. Securities and Exchange Commission (SEC) announced that it had filed a complaint against cryptocurrency exchange Bittrex and its co-founder William Shihara for operating an unregistered securities exchange, broker, and clearing house.

The SEC also filed a complaint against Bittrex's overseas affiliate Bittrex Global GmbH for not registering as a U.S. securities exchange in relation to sharing and operating an order book with Bittrex.

Bittrex was also sued by the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) and the Financial Crimes Enforcement Network (FinCEN) in October last year for violating sanctions programs and the Bank Secrecy Act.

According to the complaint, the SEC argued that cryptocurrencies traded on Bittrex, such as OMG Network (OMG), Dash (DASH), Algorand (ALGO), Monolith (TKN), Naga (NGC), and Real Estate Protocol (IHT), are securities. In its complaint, the SEC lists the reasons why these crypto assets are classified as securities.

According to the announcement, Bittrex has earned $1.3 billion (approximately 175 billion yen) in trading fees from U.S. investors from 2017 to 2022.

It also claims that Sihala, who served as CEO of Bittrex and the exchange from 2014 to 2019, instructed crypto asset issuers to remove "problematic statements," such as price predictions and profit expectations, to avoid regulatory scrutiny.

SEC Chairman Gary Gensler said, "Today's action makes it clear once again that the crypto asset market is struggling with regulatory compliance, not a lack of regulatory clarity." He continued, "Bittrex must be held accountable for its compliance violations."

SEC Enforcement Division Director Gurbir S. Grewal also claimed that "Bittrex prioritized profits over investor protection."

"Not only will we hold Bittrex accountable for its misconduct that put investors at risk, but we will also hold them accountable for violations of the federal securities laws. This is also a warning to other cryptocurrency intermediaries that are not in compliance with the federal securities laws," he said.

In response, Bittrex argued that the SEC has not notified them of any violations of the securities laws for over five years. "We have asked many times about cryptocurrencies being considered securities, but have received no response from the SEC," he said, once again asserting that the SEC's response was unjust.

Bittrex also announced on the 1st that it will close its US operations on the 30th of this month. It cited an unclear regulatory environment as the reason for the closure.

Reference:SEC announcement, Bittrex announcement
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