On August 10, the United States Securities and Exchange Commission disclosed the agreement with the crypto exchange Bittrex and its co-founder and ex-CEO, William Shihara. The deal comes in response to accusations by SEC that this unregistered platform offered services to customers illegally.
Bittrex and Bittrex Global, its associated entity, have agreed to $24 million, according to SEC. This includes repayment of the $14.4 million the exchange earned illegally and an additional $4 million in interest. Further penalties of $5.6 million are also part of the settlement. However, the court’s approval will finalize this settlement.
SEC said Bittrex worked with token issuers to clean up their online statements and make it look like they weren’t offering investment contracts. All of this was done to avoid the federal securities laws.
Director of the SEC’s Division of Enforcement, Gurbir Grewal, stated:
“Today’s settlement makes clear that you cannot escape liability by simply changing labels or altering descriptions because what matters is the economic realities of those offerings.”
Shihara told Cointelegraph that he sees the latest deal as favorable. Moreoever, the US must find a way to balance encouraging innovation and ensuring consumer protection, he said.
Today we announced that crypto asset trading platform Bittrex Inc. and its co-founder and former CEO, William Shihara, agreed to settle charges that they operated an unregistered national securities exchange, broker, and clearing agency.
— U.S. Securities and Exchange Commission (@SECGov) August 10, 2023
The companies and Shihara concurred with an order that prohibits them from violating US securities laws. However, they did not admit SEC’s accusations.
Bittrex Continuously Facing Legal Actions
In April, the financial regulator alleged that the exchange was working as an unregistered securities exchange, broker, and clearing agency between 2017 and 2022. Reportedly, Bittrex made $1.3 billion in revenue during this time.
The financial regulator also accused Bittrex Global GmbH of not registering as a national securities exchange. Shihara was the chief executive of Bittrex from 2014 to 2019.
This lawsuit was filed shortly after the announcement of co-founder and CEO Richie Lai that the company would halt its US operations on March 31 due to regulatory issues. On April 30, Bittrex US ceased operations.
On May 8, the exchange filed for Chapter 11 bankruptcy protection.
Besides Bittrex, the regulator has filed lawsuits against the largest crypto exchanges, such as Binance and Coinbase, in recent months. They are challenging the agency’s claims by taking legal action as the companies disagreed with the SEC.