Bittrex, and its former CEO William Shihara have been charged by the U.S. Securities and Exchange Commission (SEC).
The charges relate to operating an unregistered national securities exchange, broker, and clearing agency. The SEC filed four charges of Exchange Act violations against the companies and Shihara in the U.S. District Court Western District of Washington.
The SEC also filed a separate charge against Bittrex Global in connection with its operation of a single shared order book along with Bittrex.
According to the SEC‘s complaint, the tokens traded on Bittrex, including OMG, Dash, Algorand, Monolith, Naga, and IHT Real Estate Protocol, are securities.
The agency has been criticized in the past for regulation by enforcement by claiming tokens are securities only at the time when it files such complaints, and not prior.
The SEC also alleges that Bittrex and Shihara advised clients to delete problematic statements to avoid regulatory scrutiny.
The SEC complaint seeks disgorgement, penalties, and permanent injunctions against the defendants in a jury trial.
Gurbir Grewal, the director of the SEC’s enforcement division, said in a statement that the action not only holds Bittrex accountable for misconduct 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.
Bittrex was expecting the SEC’s action and reportedly received a Wells Notice warning it of the impending action in March. The exchange had already announced its intention of closing down U.S. operations on April 30 due to the regulatory environment.
Bittrex released a statement, saying that 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, they asked the SEC to tell them what digital assets on their platform they viewed as securities, so that they could review and potentially delist them. However, the SEC refused to do so.
In addition to the SEC’s charges, Bittrex was hit with charges from the U.S. Treasury’s Office of Foreign Assets Control and Financial Crimes Enforcement Network in October for violating sanctions programs and the Bank Secrecy Act.
Bittrex Charges
The charges against Bittrex are a stark reminder that regulators are closely scrutinizing cryptocurrency exchanges and the tokens they list. As the crypto industry continues to grow and mature, it is likely that regulators will continue to increase their oversight to protect investors and maintain market integrity.
Therefore, cryptocurrency exchanges need to ensure that they are complying with all applicable laws and regulations to avoid costly legal and reputational repercussions