The lawsuit, which was submitted on Monday in the U.S. District Court in Seattle, asserts that Bittrex and its previous CEO intentionally avoided regulatory scrutiny and conducted business as an unregistered broker, national securities exchange, and clearing agency.
In order to protect investors and national securities markets, Congress and the SEC have for years allegedly built regulatory frameworks and disclosure obligations that Bittrex has consistently disregarded.
According to a statement, neither Bittrex nor its products that were investment contracts offered or traded securities on their trading platform.
The SEC refused to give notice of the particular activity that it believed violated the federal securities laws for more than five years, despite many, specific requests to do so, the statement stated.
The lawsuit will place the United States at a significant disadvantage in the development of blockchain technology, according to Bittrex, which stated that it “operated within the parameters of the law at all times.
The SEC also levied charges against Bittrex Global, a Bittrex affiliate that operates a single shared order book with Bittrex without becoming a registered national securities exchange. William Shihara, a former CEO and founding member, is also listed as a defendant.
The SEC’s Division of Enforcement director, Gurbir S. Grewal, released a statement stating that Bittrex’s business model was based on three things: circumventing the federal securities laws’ registration requirements; advising issuers of crypto asset securities to do the same by changing their offering materials; and combining various market intermediary functions under one roof to maximize profits.
The claim in the lawsuit is that Bittrex sent orders to issuers of crypto asset securities to delete language from public statements that would draw SEC attention.
The corporation allegedly had a financial incentive to put more assets on the platform in order to boost income, according to the SEC. According to the accusations, Bittrex received more than $1.3 billion in transaction fees from investors between 2017 and 2022, and Shihara was paid at least $130 million in total between April 2017 and March 2020.
The lack of regulatory compliance, not a lack of regulatory clarity, is what causes the crypto markets’ problems, according to today’s move, said SEC Chair Gary Gensler in a statement.
According to a report published, the company has been the subject of an SEC investigation since 2017, and enforcement personnel informed Bittrex in March that it would suggest filing a complaint against the company.
CEO Richie Lai stated that “it’s just not economically viable for them to continue operating in the current U.S. regulatory and economic environment when Bittrex revealed last month that it was closing down its U.S. operations.
Other cryptocurrency businesses and exchanges, including Coinbase, are being investigated by the SEC.
The U.S. Treasury Department penalized Bittrex with fines totaling nearly $29 million in October. It is claimed that it did not adhere to anti-money laundering regulations while still allowing users from sanctioned countries to utilize the platform.
In February, the corporation eliminated 83 workers.
