Compilation: Felix, LianGuaiNews
Unlike Coinbase and Binance US, which have been continuously challenging the US regulatory agency SEC, another veteran US exchange, Bittrex, has chosen to pay a fine and settle with the SEC. Earlier, it had announced its withdrawal from the US market.
On August 11th, bankrupt cryptocurrency exchange Bittrex and its CEO, William Shihara, reached a settlement with the US Securities and Exchange Commission (SEC) for a fine of $24 million. The SEC stated that Bittrex agreed to pay $14.4 million in illegal profits, along with $4 million in pre-judgment interest and $5.6 million in civil penalties.
Prior to this, in April, the US SEC filed a lawsuit against Bittrex, a Seattle-based cryptocurrency exchange, and its former CEO, William Shihara, accusing Bittrex of operating a nationwide securities exchange, broker-dealer, and clearing agency without registration. The SEC stated that Bittrex had generated at least $1.3 billion in illegal revenue between 2017 and 2022. Similar to the lawsuits against Coinbase and Binance, the SEC also claimed that some assets provided by Bittrex were unregistered securities.
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Gurbir S. Grewal, the SEC’s Director of Enforcement, stated in a statement, “Over the years, Bittrex has worked with token issuers to ‘cleanse’ all indications that they are investment contracts from online statements, all in an effort to evade US federal securities laws. Today’s settlement agreement makes it clear that evading responsibility cannot be achieved simply by changing labels or descriptions, as what matters is the real economic utility of these products. We appreciate the SEC staff actively investigating misconduct in the cryptocurrency industry, bringing additional relief to harmed investors.”
According to court documents, Bittrex neither admits nor denies these allegations, nor can it make any public statement that may suggest that the SEC’s allegations have no factual basis. Bittrex must make the payment to the SEC within 90 days after its liquidation plan takes effect, but if the fees and fines are not paid by March 1st next year, the regulatory agency may seek a court judgment.
Bittrex Global stated in a statement, “We are pleased to have reached a settlement agreement with the SEC so quickly after filing a motion to dismiss. The agreement has now been submitted for court approval.” CEO William Shihara stated in a statement, “This is a good outcome. It is crucial that we strike a balance between promoting innovation, encouraging entrepreneurship, and protecting consumers in our country. I hope the settlement proposal put forward today will contribute to advancing this process.”
According to data from The Block, Bittrex was once one of the largest exchanges in the United States, with a market share of nearly 23% in USD-supported markets as of early 2018. However, it has been plagued by regulatory agencies and US authorities since 2022.
In 2022, Bittrex agreed to pay $29 million to settle enforcement cases with US authorities for “apparent violations” of sanctions against countries such as Iran, Cuba, and Syria.
In March 2023, Bittrex announced the closure of its US operations. In May of this year, Bittrex filed for bankruptcy in Delaware, but its Bittrex Global business will not be affected, and Bittrex will continue to serve customers outside the United States. According to court documents provided by bankruptcy tracking agency Chapter 11 Dockets, Bittrex has over 100,000 creditors, and its estimated assets and liabilities are between $500 million and $1 billion. Furthermore, Bittrex stated that continuing to operate the exchange “is not economically feasible in the current US regulatory and economic environment.” Currently, Bittrex is in the process of bankruptcy.
It is reported that before reaching a settlement, cryptocurrency investment firm LianGuairadigm came forward to defend Bittrex, claiming that the SEC exceeded its jurisdiction. In July, LianGuairadigm wrote, “The SEC lacks the power to regulate secondary markets for cryptocurrencies because they do not involve ‘investment contracts’ and thus do not fall within the agency’s authority for securities transactions.”
Reference: Decrypt, The Block, CoinDesk, Blockworks
Related reading: Bittrex’s bankruptcy application misunderstood: It is actually exiting the US market and will counter the SEC’s allegations.