The U.S. Securities and Exchange Commission (SEC) has alleged that Bittrex and its former CEO ran afoul of securities laws shortly after serving the company a Wells notice.
SEC lists ALGO and five other tokens as securities in Bittrex lawsuit
The SEC has filed a complaint against Bittrex and the company’s co-founder and former CEO William Shihara, alleging that they failed to register as a national securities exchange, broker, and clearing agency. Bittrex’s international affiliate, Bittrex Global GmbH, was also sued for operating as an unregistered national securities exchange.
As stated in the SEC complaint, Bittrex and Shihara asked issuers who wanted to list their tokens on the platform to delete any “problematic statements” that could lead to regulatory scrutiny against the crypto exchange.
“As laid out in our complaint, Bittrex’s business model was based on three things: circumventing the registration requirements of the federal securities laws; counseling issuers of crypto asset securities to do the same by altering their offering materials; and combining multiple market intermediary functions under one roof to maximize profits.”
Gurbir Grewal, SEC’s division of enforcement.
Furthermore, the U.S. securities regulator claimed that six tokens listed on Bittrex — OMG, DASH, ALGO, TKN, NGX, and IHT — are securities.
The SEC lawsuit against Bittrex comes after the regulator served a Wells notice to the crypto exchange. Before the notice, Bittrex announced that it would shut down operations in the US by April 30, 2023, citing regulatory uncertainty as the reason.
U.S. Rep. seeks to fire Gary Gensler as SEC chairman
The SEC under Gary Gensler’s leadership has become increasingly strict towards the crypto industry.
While Bittrex is the latest cryptocurrency exchange to come under the regulator’s sledgehammer, others like Kraken Paxos and Coinbase have also had issues with the SEC, with the last two receiving a Wells notice from the regulator.
In the Bittrex case, Gensler said that the SEC’s action against the platform was clear that “crypto markets suffer from a lack of regulatory compliance, not a lack of regulatory clarity.”
However, some of the concerns expressed by crypto companies include the fragmented regulatory environment in the United States, confusing cryptocurrency regulatory policies, and regulators’ unwillingness to cooperate with firms, all of which they claim have made operation difficult and have also caused some firms to leave the U.S. to other jurisdictions.
Meanwhile, crypto-friendly U.S. Representative Warren Davidson is looking to introduce a legislation that would remove Gensler and replace his chairmanship role with an executive director that answers to the SEC’s Board.