Bittrex agrees to pay $24 million in a settlement with the SEC over allegations of illicit revenue, without admitting or denying the allegations.
Cryptocurrency exchange Bittrex has reached an agreement to pay $24 million in a case with the United States Securities and Exchange Commission (SEC). The amount includes a repayment of $14.4 million, pre-judgment interest of $4 million, and a civil penalty of $5.6 million.
On August 10, the SEC posted on X the following:
“Today we announced that crypto asset trading platform Bittrex Inc. and its co-founder and former CEO, William Shihara, agreed to settle charges that they operated an unregistered national securities exchange, broker, and clearing agency.”
Allegations and Accusations
The SEC filed a lawsuit against Bittrex and its former CEO William Shihara in April, alleging that the Seattle-based exchange had failed to register as a broker, exchange, and clearing agency.
The agency claimed that Bittrex made at least $1.3 billion in illicit proceeds between 2017 and 2022. Gurbir S. Grewal, head of the SEC’s Division of Enforcement, stated that Bittrex worked with token issuers to “clean up” their online filings. of any indication that they were investment contracts, in an effort to evade federal securities laws.
As part of the settlement, Bittrex did not admit or deny the SEC’s allegations. This position is common in legal settlements, allowing the company to settle the case without formally acknowledging any wrongdoing.
Therefore, the SEC continues its crusade against crypto exchanges, which it accuses of selling cryptocurrencies that are financial securities to it.
When taken to court, these cryptocurrency companies often have no choice but to capitulate and settle these lawsuits out of court to avoid a long and expensive lawsuit that these cryptocurrency startups cannot afford financially.
The SEC’s Take on the Issue
“For years, Bittrex worked with token issuers to ‘scrub’ their online statements of any indicia that they were investment contracts—all in an effort to evade the federal securities laws. They failed,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement.
Grewal further commented that “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.”
Ongoing Problems with Regulators
Bittrex has faced problems with US regulators and authorities since last year. In 2022, the exchange house agreed to pay $29 million to resolve compliance cases with the US authorities for “apparent violations” of sanctions against countries such as Iran, Cuba and Syria.
In addition, in May, it filed for bankruptcy shortly after closing its US operations, arguing that it was not “economically viable” to continue operating in the “current US economic and regulatory environment.”
Overall, Bittrex’s settlement with the SEC marks another chapter in the complex relationship between cryptocurrency exchanges and regulators. The resolution of this case may offer insight into how authorities are addressing regulatory issues in the cryptocurrency space, and how companies are responding to an ever-changing legal environment.
The Bittrex story serves as a reminder of the importance of regulatory compliance and the potential consequences of not doing so.
By Audy Castaneda
