Bittrex, the U.S. exchange, settles with the SEC for a $24 million fine

Written by: Felix, PANews

Unlike Coinbase and Binance US, which continue to challenge the U.S. regulator SEC, another established U.S. exchange, Bittrex, has chosen to pay a fine and settle with the SEC, having previously announced its exit from the U.S. market.

On August 11, the bankrupt cryptocurrency exchange Bittrex and its CEO William Shihara reached a settlement with the U.S. Securities and Exchange Commission (SEC) for a fine of $24 million. The SEC stated that Bittrex agreed to pay $14.4 million in illegal gains, along with $4 million in pre-judgment interest and a $5.6 million civil penalty.

Earlier, in April, the SEC filed a lawsuit against the Seattle-based cryptocurrency exchange Bittrex and its former CEO William Shihara, accusing Bittrex of operating a national securities exchange, broker, and clearing agency without registration. The SEC claimed that Bittrex had illegally earned at least $1.3 billion from 2017 to 2022. Similar to the lawsuits against Coinbase and Binance, the SEC also alleged that some of the assets offered by Bittrex were unregistered securities.

Gurbir S. Grewal, the SEC's enforcement director, stated in a press release: "For years, Bittrex worked with token issuers to 'clear' all indications in online statements that they were investment contracts, all in an effort to evade U.S. federal securities laws. Today's settlement agreement makes it clear that one cannot evade responsibility simply by changing labels or descriptions, as what matters is the actual economic use of these products. We thank the SEC staff for their diligent pursuit of violations in the cryptocurrency industry, bringing additional relief to harmed investors."

According to court documents, Bittrex neither admits nor denies the allegations and cannot make any public statements that may suggest the SEC's charges are unfounded. Bittrex must pay the SEC within 90 days after its liquidation plan takes effect; however, if the fees and fines are not paid by March 1 of next year, the regulator may seek a court judgment.

Bittrex Global stated in a press release: "We are pleased to have reached a settlement agreement with the SEC so quickly after filing a motion to dismiss. The agreement has now been submitted for court approval." CEO William Shihara remarked in a statement: "This is a good outcome. It is crucial that our country strikes a balance between promoting innovation, encouraging entrepreneurship, and protecting consumers, and I hope the settlement proposed today helps advance that process."

According to data from The Block, Bittrex was once one of the largest exchanges in the U.S., with a market share of nearly 23% for USD-supported trading as of early 2018. However, it has faced scrutiny from regulators and U.S. authorities since 2022.

In 2022, Bittrex agreed to pay $29 million to settle enforcement cases with U.S. authorities for "clear violations" of sanctions against countries such as Iran, Cuba, and Syria.

In March 2023, Bittrex announced it would shut down its U.S. operations. In May of this year, Bittrex filed for bankruptcy in Delaware, with Bittrex Global's operations unaffected, as Bittrex will continue to serve customers outside the U.S. A court document provided by bankruptcy tracking agency Chapter 11 Dockets indicated that Bittrex has over 100,000 creditors, with estimated assets and liabilities valued between $500 million and $1 billion. Additionally, Bittrex stated that continuing to operate the exchange "is economically unfeasible" under the "current U.S. regulatory and economic environment." Bittrex is currently in bankruptcy proceedings.

It is reported that prior to the settlement, cryptocurrency investment firm Paradigm stepped in to defend Bittrex, claiming that the SEC had overstepped its jurisdiction. Paradigm wrote in July: "The SEC lacks the authority to regulate the secondary market for crypto assets because they do not involve 'investment contracts' and thus do not fall within the agency's jurisdiction over securities trading."