- Bittrex has hit back at the SEC over yesterday’s lawsuit
- The agency has sued Bittrex and its former CEO for unregistered sales of securities
- Bittrex says it tried to get insight from the SEC but the agency refused to talk to the company
Crypto exchange Bittrex has hit back at the Securities and Exchange Commission (SEC) after it was sued for alleged sales of securities, saying that the SEC failed to inform it when asked which coins the agency considered to be securities. The SEC filed proceedings against Bittrex yesterday over the sale of several cryptocurrencies it deems securities, almost three weeks after Bittrex announced that it was shuttering its services due to “continued regulatory uncertainty”.
— Bittrex (@BittrexExchange) April 17, 2023
SEC Wants a Slice of Bittrex’s $1.3 Billion Profits
The SEC sued Bittrex yesterday, alleging that between 2017 and 2022 it “earned at least $1.3 billion in revenues from, among other things, transaction fees from investors, including U.S. investors, while servicing them as a broker, exchange, and clearing agency without registering any of these activities with the Commission.” In addition to complaints regarding the company, the SEC has also said that William Shihara, who was the company’s CEO from 2014 to 2019, advised projects that wanted to list on the exchange to remove wording from their public communications that could lead regulators to judge them to be securities.
As a result of its investigation, the SEC has charged Bittrex and Shihara with operating an unregistered national securities exchange, broker, and clearing agency, demanding unspecified disgorgement and penalties. The news adds weight to the SEC’s decision to go after “broker-dealers” this year.
Bittrex Says SEC Didn’t Respond
Bittrex hit back following the news, with their argument falling on ground that is becoming all too common. The exchange tweeted that it was “disappointed with the SEC’s decision to bring an enforcement action against Bittrex”, calling it “part of Chairman Gensler’s larger crusade to drive cryptocurrency out of the United States”. The company denied that securities or investment contracts were sold on the exchange, and then hit out at the SEC’s approach:
For over five years, and despite multiple, specific requests to do so, the SEC would not provide notice of the specific conduct that it thought violated the federal securities laws. Specifically, on multiple occasions, we asked them to tell us what digital assets on our platform they viewed as securities so that we could review and potentially delist them. They refused to do so.
This mirrors the findings from other exchanges, most notably Coinbase, and makes a mockery of Gensler’s desire to have crypto platforms “come in and talk to us”. Bittrex added that it looked forward to “vindicating our position in court”, and had a warning for the SEC:
The SEC’s actions will directly and substantially harm U.S. customers and U.S. employees in this industry and will ultimately put our country at a significant disadvantage in the development of blockchain technology, including uses far beyond cryptocurrency, in the future.
This eventuality, it seems, is not something that the SEC seems too bothered about.
