The Securities and Exchange Commission (SEC) has filed charges against Bittrex, one of the largest crypto exchanges in the US, and its former CEO William Shihara for allegedly operating an unregistered securities exchange. In a complaint filed on Monday, the SEC claims that Bittrex earned over $1.3 billion in revenue between 2017 and 2022 by offering services of a broker, exchange, and clearing agency, without registering with the Commission as required by federal law.
The SEC further alleges that Bittrex “coordinated” with crypto issuers to delete “problematic statements” that could trigger an investigation by the regulator. According to the Commission, Shihara instructed a potential issuer to erase comments related to “price predictions” and “expectation of profit.” This alleged coordination with issuers to manipulate information is seen as an attempt to evade regulatory scrutiny.
SEC Chair Gary Gensler commented on the charges, stating, “Today’s action, yet again, makes plain that the crypto markets suffer from a lack of regulatory compliance, not a lack of regulatory clarity.” The SEC claims that Bittrex and the issuers it worked with were aware of the rules but intentionally tried to avoid them by deleting information that indicated certain crypto assets could be considered securities.
It is worth noting that Bittrex had announced last month that it would be exiting the US market by the end of April, citing “continued regulatory uncertainty.” The company has also recently confirmed that it was notified by the SEC of potential enforcement action. Bittrex’s general counsel, David Maria, has stated that the company plans to challenge the lawsuit unless the SEC offers a reasonable settlement offer.
This is not the first time Bittrex has faced regulatory penalties. Last year, the US Treasury fined the company $29 million for failing to comply with US money laundering and sanction laws in the past.
The charges filed by the SEC against Bittrex and its former CEO highlight the importance of regulatory compliance in the crypto markets. The allegations of operating an unregistered securities exchange and coordinated deletion of statements with crypto issuers raise concerns about the need for clear regulatory guidelines and adherence to federal laws in the rapidly evolving world of cryptocurrencies.