8xbet SEC Charges Bittrex, Former CEO for Operating Unregistered Securities Exchange - BLOCKCHAINWEBBAG

SEC Charges Bittrex, Former CEO for Operating Unregistered Securities Exchange

The Securities and Exchange Commission (SEC) filed charges against Bittrex Monday, alleging the Seattle-based exchange failed to comply with securities law by not registering with the financial watchdog in several areas.

The SEC’s criminal complaint alleges the exchange failed to register as a broker-dealer, exchange, and clearing agency, taking in at least $1.3 billion in illicit revenue between 2017 and 2022.

The lawsuit names Bittrex, Bittrex Global, and Bittrex co-founder and former CEO Bill Shihara. 

The enforcement action comes after Bittrex announced it was shutting down late last month, requesting users withdraw their funds from the platform by the end of this month.

“Bittrex has for years defied the regulatory structures and evaded the disclosure requirements that Congress and the SEC have over the course of decades constructed for the protection of the national securities markets and investors,” the lawsuit states.

The SEC’s attempt to go after Bittrex represents the latest development in a string of enforcement actions brought by U.S. regulators, targeting several cryptocurrency exchanges so far this year, among other firms native to the digital assets industry.

Kraken and Coinbase found themselves squarely in SEC’s sights over products related to staking cryptocurrencies, while the Commodity Futures Trading Commission has gone after Binance for violating several derivatives trading rules.

“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 Chairman Gary Gensler said in a press release. “Today we’re holding Bittrex accountable for its non-compliance.”

Tokens on Bittrex in the spotlight

The lawsuit notes that since the exchange’s inception, it offered over 300 digital assets to investors. 

And though “many of the tradeable crypto assets on the Bittrex Platform have characteristics” that allegedly resemble securities, the lawsuit specifically names six tokens as examples on Bittrex that include OMG Network (OMG), Dash (DASH), Algorand (ALGO), Monolith (TKN), Naga (NGC), and Real Estate Protocol (IHT).

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Algorand is by far the largest token named in the lawsuit by market capitalization, ranked 42nd among all tokens at $1.6 billion, according to CoinGecko

While the token was already in the red, Algorand fell further after the lawsuit’s release, dropping 2.5% to $0.22 over the past day.

The SEC lawsuit accuses Bittrex of not only failing to register but also putting profits over investor protections in listing certain tokens, well aware of what to avoid in terms of potential SEC scrutiny.

During his tenure as CEO of Bittrex, Shihara was at the forefront of a campaign within the company to clean up “problematic statements,” where the exchange directed the issuers of digital assets to scrub public statements of language that would raise eyebrows at the SEC, the lawsuit alleges.

However, even though it began removing certain crypto assets from its platform to avoid SEC scrutiny in April 2019, the exchange allegedly brought back some in an attempt to “stay relevant,” including DASH and OMG.

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