Bittrex in trouble with SEC for operating an unregistered exchange

Securities and Exchange Commission (SEC), who filed charges against Bittrex, its co-founder and former CEO William Shihara for operating an unregistered national securities exchange, broker, and clearing agency.

This took place after Bittrex announced it would be shorting down its US operations due to the fact that “It’s just not economically viable for us to continue to operate in the current U.S. regulatory and economic environment,” explained by the CEO Ritchie Lai, who went on to blame “unclear” regulatory requirements

The SEC also charged Bittrex, Inc.’s foreign affiliate, Bittrex Global GmbH, for failing to register as a national securities exchange in connection with its operation of a single shared order book along with Bittrex.

According to SEC Chair Gary Gensler, he said “Today’s action, yet again, makes plain that the crypto markets suffer from a lack of regulatory compliance, not a lack of regulatory clarity. 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.”

More so, Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, stated that “We allege that Bittrex repeatedly chose profits over investor protection,” and went on to say “As laid out in our complaint, Bittrex’s business model was based on three things: circumventing the registration requirements of the federal securities laws; counseling 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.”

The Investigation on Bittrex, was conducted by the Daphna Waxman and Pamela Sawhney of the Division of Enforcement’s Crypto Assets and Cyber Unit and Ainsley Kerr of the Market Abuse Unit. It was supervised by Mark R. Sylvester, Jorge Tenreiro, and David Hirsch of the Crypto Assets and Cyber Unit.