- Bittrex settled SEC charges for operating as an unregistered exchange, broker, and clearing house.
- The settlement continues to stir concerns about the lack of clear rules.
- Regulators and lawmakers are working to establish appropriate frameworks.
The Securities Exchange Commission’s (SEC) regulatory offensive against the crypto industry continues unabated. Its latest campaign target, prominent crypto exchange Bittrex, has opted for a $24 million settlement rather than face trial.
The SEC sued Bittrex and its former CEO William Shihara in April over charges contravening the Securities Exchange Act of 1934. As part of the settlement, neither Bittrex nor Shihara admitted or denied the allegations.
Bittrex Settles With the SEC
The SEC’s press release stated that Bittrex had agreed to settle SEC allegations of operating an unregistered exchange, broker, and clearing house. Further allegations of record alteration were also made.
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Commenting on the settlement, the Director of the SEC’s Division of Enforcement, Grubir S. Grewal, said:
“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.”
Bittrex Inc and Bittrex Global agreed to pay a fine of $14.4 million, prejudgment interest of $4 million, and a civil penalty of $5.6 million, bringing the total settlement to $24 million.
Reacting to the news, Tony Edward of the Think Crypto Podcast blasted the SEC, likening the settlement to extortion. He added that the securities regulator persists in not collaborating with Congress to establish clear rules.
Lawmakers Push for Clarity
In a DailyCoin interview published earlier this month, crypto-friendly SEC Commissioner Hester Peirce chimed into the debate, saying she is equally flummoxed regarding the rules on staying compliant. She said:
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“I mean, I would like to know what companies have to do to comply with SEC rules, too, because I don’t know either. The problem is that we haven’t addressed that question seriously as the agency or as the broader U.S. The agency hasn’t.”
On establishing appropriate regulatory frameworks, Peirce suggested incorporating a sandbox, enabling crypto firms to experiment on a small scale without posing a risk to wider financial systems.
Despite the apparent regulatory hostility, lawmakers are actively making strides toward addressing the issues. For example, Chairman Patrick McHenry of the House Financial Services Committee recently assisted in passing the “Clarity for Payment Stablecoins Act,” establishing federal guardrails and consumer protections.
SEC Allegations
In an April complaint, the SEC made several allegations against Bittrex entities, including failure to register as a national securities exchange and attempting to “scrub” marketing statements about the securities status of its offerings.
The SEC claimed the platform had earned around $1.3 billion in revenue due to its alleged unlawful operations in the US.
On the Flipside
- The SEC’s aggressive stance toward crypto could stifle innovation, driving companies to friendlier jurisdictions.
- Mass adoption cannot happen until frameworks are established and all parties know the rules.
Why This Matters
The SEC’s “war on crypto” has not endeared it among the community. However, the reality is that the US crypto industry must bend to the will of regulators, regardless of the perceived unfairness of its rules.
Read the full Commissioner Peirce interview here:
Commissioner Peirce: SEC Should Ask Crypto Investors What Protections They Need
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