Bittrex Settles SEC Case for $24 Million

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  • The SEC has announced that Bittrex and its co-founder William Shihara have settled their case with the SEC for $24 million
  • The agency sued Bittrex for alleged sales of securities, with Bittrex complaining over the SEC’s actions at the time
  • Bittrex U.S. announced its closure three weeks after the lawsuit in April

The Securities and Exchange Commission (SEC) yesterday announced that crypto exchange Bittrex, its co-founder and former CEO William Shihara, and its foreign affiliate Bittrex Global GmbH have agreed to settle charges of operating an unregistered national securities exchange, broker, and clearing agency. The trio were sued in April, just weeks before Bittrex U.S. had announced its imminent closure due to the regulatory landscape. As a result of the deal, Bittrex and Bittrex Global will pay $24 million in disgorgement, interest and civil penalties.

Bittrex Doesn’t Admit or Deny Charges

The SEC’s complaint, filed in April 2023, alleged that Bittrex provided services to U.S. investors involving crypto assets that were offered and sold as securities without proper registration. The complaint also stated that Bittrex and Shihara directed issuers to remove certain “problematic statements” from public channels before making crypto assets available for trading to avoid regulatory investigation. As part of the settlement, Bittrex neither admits nor denies the SEC’s allegations.

Bittrex had initially denied all the charges brought by the SEC, claiming that the agency failed to inform it when asked which coins the SEC considered to be securities. Bittrex announced that it was shuttering its services due to “continued regulatory uncertainty” three weeks after the SEC’s action

SEC Claims Victory

Following months of negotiations, the pair have come to an agreement that will see Bittrex and Bittrex Global pay disgorgement of $14.4 million, prejudgment interest of $4 million, and a civil penalty of $5.6 million, for a total monetary payment of $24 million. Despite Bittrex not admitting or denying the charges as part of the deal, Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, was keen to stress his view of the outcome:

For years, Bittrex worked with token issuers to ‘scrub’ their online statements of any indicia that they were investment contracts—all in an effort to evade the federal securities laws. They failed. Today’s settlement makes clear that you cannot escape liability by simply changing labels or altering descriptions because what matters is the economic realities of those offerings.

Bittrex had already earmarked $25 million in possible penalties in its bankruptcy filing, and the settlement won’t make a huge dent in its $1.3 billion operating profits from the year.