US SEC Files Charges Against Crypto Exchange Bittrex for Alleged Violations of Securities Laws

The Securities and Exchange Commission (SEC) has charged Bittrex, one of the largest crypto exchanges in the US, and its former CEO William Shihara with operating an unregistered securities exchange. According to the SEC, Bittrex earned at least $1.3 billion in revenue between 2017 and 2022 while offering broker, exchange, and clearing agency services without registering with the Commission. The SEC also claims that Shihara instructed potential issuers to delete “problematic statements” that could attract regulatory scrutiny.

The charges highlight the regulatory uncertainty surrounding the cryptocurrency industry, as Bittrex announced last month that it would exit the US market due to “continued regulatory uncertainty.” The company’s general counsel, David Maria, said that Bittrex would challenge the lawsuit unless the SEC offered “a reasonable settlement offer.”

SEC Chair Gary Gensler stated that “today’s action, yet again, makes plain that the crypto markets suffer from a lack of regulatory compliance, not a lack of regulatory clarity.” The charges against Bittrex come after the US Treasury fined the company $29 million last year for failing to comply with US money laundering and sanction laws.

The SEC’s enforcement action against Bittrex underscores the need for clearer regulation in the cryptocurrency industry. While some industry participants argue that regulatory clarity would stifle innovation and growth, others argue that regulation is necessary to protect investors and ensure the long-term viability of the industry. As the industry continues to evolve, it remains to be seen how regulators will balance the need for innovation with the need for investor protection.