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The Securities and Exchange Commission (SEC) has charged crypto asset trading platform Bittrex, Inc., its co-founder and former CEO William Shihara, and its foreign affiliate Bittrex Global GmbH for operating an unregistered national securities exchange, broker, and clearing agency.
According to the SEC, Bittrex has facilitated the buying and selling of crypto assets since at least 2014, earning at least $1.3 billion in revenues from transaction fees.
The SEC claims that Bittrex and Shihara collaborated with issuers to delete "problematic statements" from public channels, which could have led regulators to investigate crypto assets as security offerings.
Further, the claim alleges that Bittrex listing of tokens OMG, Dash, ALGO, Monolith (TKN), Naga (NGC) and IHT Real Estate Protocol (IHT) constituted unregister securities offerings.
The Commission's Chair, Gary Gensler, stated that the case demonstrates the crypto market's lack of regulatory compliance, not clarity.
Gensler Under Fire for Unlawful Algorand Promotion
In a related development, Gary Gensler is under fire for promoting Algorand (ALGO), one of the six tokens listed on Bittrex that the SEC has now deemed a security.
Footage has emerged of Gensler speaking highly of Algorand and its founder, Silvio Micali, at various public events since 2019.
Gensler's promotion of a security falls under the Securities Act of 1933 and the Securities Exchange Act of 1934, which regulate the offer and sale of securities and prohibit misrepresentation or omission of material facts.
Those who breach these regulations can face civil and criminal penalties, including fines and imprisonment.
Rep. Davidson Moves to Remove Gensler
Rep. Warren Davidson has introduced legislation to remove Gensler from his role as SEC Chair, citing a "long series of abuses" and "unconstitutional overreach."
The announcement follows the SEC's proposed redefinition of an "exchange" under its rules, potentially encompassing crypto market participants in decentralized finance (DeFi).
The proposed amendments would require such systems to register as national securities exchanges or as broker-dealers and comply with Alternative Trading System (ATS) regulations.
Gensler's proposal has drawn criticism from crypto advocates, including Coinbase's legal chief, Paul Grewal, who declared his intention to oust Gensler from his role.
Nonprofit blockchain advocacy group Coin Center has also deemed the SEC's approach "unconstitutional."
Meanwhile, SEC Commissioner Hester Peirce filed a dissent against Gensler's policy move.