The legal tussle between the United States Securities and Exchange Commission (SEC) and crypto exchange Bittrex met its conclusion. The crypto exchange agreed to pay $24 Million in fines to the financial regulator.
In April this year, the regulator filed a complaint against Bittrex for operating as an unregistered exchange. It also charged co-founder and former CEO Willam Shihara and Bittrex Global. The trading platform wing for non-US native users was charged separately for sharing the “order book along with Bittrex” despite being different entities.
The SEC charges noted that the Seattle-headquartered crypto firm operated as a security exchange, broker, and clearing house agency without prior regulatory registration.
According to the SEC, Bittrex and Bittrex Global would pay $14.4 Million for disgorgement, to repay the profits gained through illicit means, $5.6 Million in civil penalties, and $4 Million in prejudgment interest. This way, the crypto company would be paying $24 Million to the agency for the settlement with the regulator following the court’s approval.
The agency took to Twitter and made the announcement of the settlement of the charge along with the statement from Gurbit Grewal, enforcement director at the SEC.
Grewal noted that the crypto exchange worked with “token issuers to ‘scrub’ their online statements” that would indicate their investment contracts. All these efforts were made to bypass the federal securities laws but “they failed.”
“Today’s settlement makes clear that you cannot escape liability by simply changing labels or altering descriptions, because what matters are the economic realities of those offerings.”
Bittrex Faced Regulatory Action in the Past
It’s not the first time Bittrex will go face-to-face against a financial regulator. In October last year, the Office of Foreign Assets Control and Financial Crimes Enforcement Network, which falls under the United States Department of the Treasury took enforcement action against the crypto firm.
At the time, the firm agreed to pay a hefty fine of $29 Million in a settlement agreement with the regulator.
Earlier in March 2023, given the increasing regulatory pressure and enforcement actions against crypto entities, Bittrex announced the plans to close its United States operations.
Strangling Crypto Regulations in the United States
Bittrex is yet another example of a crypto company to face regulatory actions in the past few months. The broader cryptocurrency space in the United States has seen ramped-up enforcement actions since last year’s implosion of the Terra (LUNA) network.
The mishap resulted in billions of dollars worth of investment going in vain. It initiated a ripple effect that resulted in the fall of several other crypto companies. Other than Celsius, BlockFi, and Voyager-like crypto firms, the bankruptcy filing of leading crypto exchange FTX was the biggest blow to the industry in recent times.
The SEC started clamping down on crypto industries charging companies for alleged offerings. Crypto exchange Kraken paid $30 Million in fines for settlement with the regulator and shut down staking services offerings after the enforcement action.
