The U.S. Securities and Exchange Commission (SEC) has announced that Bittrex Inc, along with its co-founder and former CEO, William Shihara, have reached a settlement with the regulatory body. The agreement stems from allegations that Bittrex operated as an unregistered national securities exchange, broker, and clearing agency.
Additionally, Bittrex Inc.’s foreign affiliate, Bittrex Global GmbH, has also agreed to settle charges related to its failure to register as a national securities exchange.
The SEC’s complaint, filed on April 17, 2023, in the U.S. District Court for the Western District of Washington, asserts that Bittrex offered services to U.S. investors in connection with crypto assets that were allegedly sold as securities. The complaint further claims that Bittrex and its former CEO, Shihara, directed token issuers seeking to have their crypto assets traded on the platform to remove specific statements from public channels. These statements were deemed “problematic” by Shihara, as they could potentially trigger investigations by regulatory authorities such as the SEC.
“For years, Bittrex worked with token issuers to ‘scrub’ their online statements of any indicia that they were investment contracts—all in an effort to evade the federal securities laws. They failed,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement. “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.
As part of the settlement, which remains subject to court approval, the defendants – Bittrex, Shihara, and Bittrex Global – have consented to permanent injunctions against violating specific sections of the Securities Exchange Act of 1934. Bittrex and Bittrex Global jointly agreed to pay disgorgement of $14.4 million, along with prejudgment interest totaling $4 million. Additionally, a civil penalty of $5.6 million has been imposed, resulting in a total monetary payment of $24 million.
The crypto platform filed for bankruptcy three weeks after the SEC filed its charges. The firm has halted operations in the United States since April 30, and the company stated that the bankruptcy filing would have no effect on Bittrex Global, which serves consumers outside the United States.
Information for this briefing was found via SEC and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.