Crypto Exchange Bittrex Violated Federal Laws, SEC Alleges in Lawsuit
The US Securities and Exchange Commission (SEC) alleged that crypto exchange Bittrex simultaneously operated a national securities exchange, brokerage and clearing agency in violation of federal statutes. Former CEO Bill Shihara and Bittrex Global GmbH are also charged.
Bittrex worked with crypto issuers to “delete … ‘problematic statements'” that the SEC would investigate, the regulator said in a press release published Monday, including price predictions and statements suggesting an “expectation of profit.” The SEC also claims that Bittrex should have registered as an exchange, clearing agency and broker, since it provided the services to all three types of entities.
SEC Enforcement Director Gurbir Grewal said the lawsuit against Bittrex “should send a message to other non-compliant crypto market intermediaries.”
“As stated in our complaint, Bittrex’s business model was based on three things: circumventing the registration requirements of the federal securities laws; advising issuers of crypto-asset securities to do the same by changing their offering materials; and combining multiple market making functions under one roof for to maximize profits,” he said.
Bittrex announced last month that it plans to exit the US by the end of April, citing “the current US regulatory and economic environment.” This past weekend, the company shared more information, when General Counsel David Maria told the Wall Street Journal that the company had received a Wells notice — a statement that the SEC’s enforcement division found evidence of wrongdoing — in March. Maria told the Journal that Bittrex would fight the case unless the SEC made a “reasonable settlement offer.”
The SEC’s lawsuit is reminiscent of a recent case against Beaxy, a company that settled similar allegations, and hints at the charges it could bring against Coinbase ( COIN ), the largest U.S. exchange that also received a Wells notice last month.
According to the complaint, the SEC claims omise go (OMG), algorand (ALGO), dash (DASH), tokencard (TKN), i-house token (IHT) and naga (NGC) are securities. Algorand’s token fell on the news, falling 2.5% in intraday trade on 24-hour volume gains.
UDPATE (April 17, 2023, 14:20 UTC): Adding further details.
UPDATE (April 17, 14:30 UTC): Adding quote from SEC Enforcement Director Gurbir Grewal.
UPDATE (April 17, 14:40 UTC): Adding algo price movement.
