- The U.S. Securities and Exchange Commission Monday charged Bittrex and its former CEO with operating an illegal cryptocurrency exchange
- Bittrex earned $1.3 billion between 2017 and 2022, the SEC contends
- The Seattle-based company operated as an exchange, deliberately avoiding proper regulatory oversight
- The company now says it will cease U.S. operations at the end of April
The U.S. Securities and Exchange Commission Monday charged Bittrex and its former CEO with operating an illegal cryptocurrency exchange.
The SEC charged both the crypto asset trading platform co-founder William Shihara with operating an unregistered national securities exchange, broker, and clearing agency, the agency said in a news release.
The company posted a statement on its website Monday following the charges, saying it will cease its U.S. operations at the end of April.
“Due to continued regulatory uncertainty, we have made the difficult decision to close our U.S. operations,” the company’s website states.
In the filing, the SEC contends Seattle-based Bittrex earned at least $1.3 billion in revenues from things likes transaction fees from investors between 2017 and 2022.
While serving as a broker, exchange, and clearing agency, the company did not register any of the required activities with the SEC.
Shihara served as its Chief Executive Officer from 2014 until 2019.
The SEC says he reportedly directed clients to remove “problematic statements” from their accounts that would lead to regulatory issues.
The commission contends that Bittrex should have registered as an exchange because it “brought together, using a shared order book, the orders for securities of multiple buyers and sellers using established, non-discretionary methods under which such orders interacted, and the buyers and sellers entering such orders agreed to the terms of a trade,” ostensibly carrying out the duties and functions of a an exchange, without the oversight.
“Today’s action, yet again, makes plain that the crypto markets suffer from a lack of regulatory compliance, not a lack of regulatory clarity,” SEC Chair Gary Gensler said in a statement issued Monday.
“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. Further, Bittrex, as alleged, failed to register and comply with U.S. securities laws as an exchange, broker-dealer, and clearing agency. Cosmetic alterations did nothing to change the underlying economic realities of the offerings and Bittrex’s conduct. Today we’re holding Bittrex accountable for its non-compliance.”
The case is being heard in the Western District of Washington.
“We allege that Bittrex repeatedly chose profits over investor protection,” SEC Division of Enforcement Director Gurbir Grewal, said in the sattement.
“As laid out in our complaint, Bittrex’s business model was based on three things: circumventing the registration requirements of the federal securities laws; counselling issuers of crypto asset securities to do the same by altering their offering materials; and combining multiple market intermediary functions under one roof to maximize profits. Today’s action not only holds Bittrex accountable for misconduct that we allege put investors at risk, but should also send a message to other non-compliant crypto market intermediaries to follow the federal securities laws or be held accountable for their violations.”