The U.S. Securities and Exchange Commission (SEC) recently announced a settlement of $24 million with Bittrex and its former CEO, William Shihara. The SEC had made several allegations against Bittrex, accusing the company of instructing coin issuers to remove statements that could potentially raise regulatory concerns. Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, stated that Bittrex had been working with token issuers to remove any indications that these tokens were investment contracts, in an attempt to evade federal securities laws.
Unregistered Securities Exchange
In addition to the allegations mentioned earlier, the SEC claimed that Bittrex functioned as an unregistered national securities exchange, broker, and clearing agency. The SEC specifically accused Bittrex and Shihara of providing services to U.S. investors involving crypto assets that were regarded as securities. Furthermore, the SEC stated that Bittrex’s foreign affiliate, Bittrex Global, failed to register as a national securities exchange. As a result, Bittrex and Bittrex Global have agreed to settle the charges brought against them.
Details of the Settlement
As part of the settlement, Bittrex and Bittrex Global will pay a total of $24 million in charges. This amount includes disgorgement charges of $14.4 million, prejudgment interest of $4 million, and a civil penalty of $5.6 million. It is important to note that the defendants are not required to admit or deny the charges made by the SEC. Additionally, Bittrex, Bittrex Global, and Shihara will be restrained from violating certain sections of the Securities Exchange Act of 1934.
Impact on Bittrex’s Operations
Although the settlement does not necessarily restrict Bittrex from conducting operations internationally, the company had already ceased its U.S. operations prior to the charges becoming public. Furthermore, Bittrex’s U.S. arm filed for bankruptcy in June, following the SEC’s charges. This indicates the significant impact the case has had on the company’s operations within the United States.
Broader Regulatory Developments
The settlement between the SEC and Bittrex is just one example of several recent securities-related developments. In July, Ripple achieved a partial victory in its SEC case, while the SEC initiated cases against Binance and Coinbase in June. These cases highlight the increasing scrutiny and regulatory enforcement within the cryptocurrency industry.
The $24 million settlement between Bittrex and the SEC signifies the consequences of regulatory evasion. The allegations brought against Bittrex, including the instruction to remove problematic statements and the operation as an unregistered securities exchange, have led to significant financial penalties. This settlement also reflects the broader regulatory landscape within the cryptocurrency industry, with other major players facing similar enforcement actions. It serves as a reminder that compliance with securities laws is crucial for the sustainable growth and legitimacy of crypto exchanges and platforms.