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The US Securities and Exchange Commission (SEC) filed a lawsuit against the crypto exchange Bittrex and its co-founder for violating securities regulations. The move comes just weeks after Bittrex announced its plan to leave the US at the end of April.
Bittrex Cooperated with Crypto Issuers to Delete Statements that Could Lead to an Investigation, SEC Alleges
The SEC filed charged crypto exchange Bittrex and its co-founder William Shihara “for operating an unregistered national securities exchange, broker, and clearing agency,” the government agency said in a press release on Monday. Further, the SEC also took legal action against the exchange’s foreign affiliate Bittrex Global.
In its lawsuit, the SEC alleges that since at least 2014, Bittrex has operated a platform that allowed clients to trade crypto assets that the agency says were offered and sold as securities. Further, the agency alleges that the crypto exchange bagged a minimum of $1.3 billion in revenues from investor transaction fees between 2017 and 2022. Bittrex profited from those fees while offering brokerage and exchange services without previously registering any of those with the SEC, the regulator states.
Moreover, the lawsuit accused Bittrex and former CEO Shihara of collaborating with crypto issuers to delete “problematic statements” that Shihara thought would lead to the SEC opening an investigation.
“For example, in an effort to avoid regulatory scrutiny, before Bittrex would make an asset available on its platform, Bittrex and Shihara instructed issuer-applicants to delete statements related to “price prediction[s],” “expectation of profit,” and other “investment related terms.”“
– the SEC wrote in the press release.
Crypto Markers Lack Regulatory Compliance, not Regulatory Clarity, Says SEC Chair
Further in the press release, the SEC Chair Gary Gensler said the agency’s action against Bittrex highlights that crypto markets lack regulatory compliance rather than regulatory clarity. Gensler added that Bittrex and related issuers were familiar with the regulators “but went to great lengths to evade them.”
The lawsuit marks the latest legal step the SEC took against a crypto company amid the recent crackdown by US regulators on the burgeoning sector. Crypto exchanges have been particularly targeted by regulators, which have been going after the companies that issued cryptocurrencies on these platforms for the past several years.
Earlier this year, the SEC forced digital assets to exchange Kraken to shut down its staking service and pay a $30 million penalty. Similarly, the securities regulator delivered a Wells notice to Coinbase, indicating that it plans a possible legal enforcement action against the San Francisco, California-based exchange.
Do you think the SEC’s recent crackdown on crypto exchanges is needed to better regulate the crypto sector? Let us know in the comments below.