The Securities and Exchange Commission (SEC) has filed charges against cryptocurrency exchange Bittrex and its former CEO, William Shihara, accusing them of operating an unregistered securities exchange. The complaint, filed on Monday, claims that Bittrex, once among the largest US crypto exchanges, generated at least $1.3 billion in revenue from 2017 to 2022 by offering services as a broker, exchange, and clearing agency without registering with the SEC, which is a violation of federal law.
The SEC also alleges that Bittrex “coordinated” with crypto issuers to remove “problematic statements” that Shihara believed would lead to regulatory scrutiny from agencies like the SEC. In one case, Shihara reportedly instructed a potential issuer to delete comments mentioning “price predictions” and “expectation of profit.”
Also Read: US Draft Bill Proposes Federal Reserve as Stablecoin Regulator
SEC Chair Gary Gensler said, “Today’s action, yet again, makes plain that the crypto markets suffer from a lack of regulatory compliance, not a lack of regulatory clarity. As alleged in our complaint, Bittrex and issuers that it worked with knew the rules that applied to them but went to great lengths to evade them by directing issuer-applicants to ‘scrub’ offering materials of information indicating that certain crypto assets were securities.”
Bittrex’s Response and Previous Legal Issues
Bittrex, citing “continued regulatory uncertainty,” announced last month that it would exit the US market by the end of April. The company recently informed The Wall Street Journal that it had been notified by the SEC about potential enforcement action. David Maria, Bittrex’s general counsel, stated that the company would challenge the lawsuit unless the SEC proposed “a reasonable settlement offer.” In 2021, the US Treasury fined Bittrex $29 million for failing to comply with US money laundering and sanction laws.
