The US securities regulator has
charged cryptocurrency exchange Bittrex
and William Shihara, its Founder and former CEO, for operating as a national
securities exchange, broker and clearing agency without registration.
According to US Securities and Exchange Commission (SEC), Bittrex violated
registration requirements of the US federal securities law, instructed crypto
issuers using its platform to delete certain information that indicated their
digital assets were securities, and ran different market intermediary functions
under one entity in order to maximize profits.
The regulator also filed charges
against Bittrex Global GmbH, a foreign affiliate of the digital asset firm, for joining hands
with Bittrex to operate a single shared order book–a central system that
allows traders to submit buy and sell orders for a particular asset or
security–without registering as a national securities exchange.
The SEC announced the lawsuit on
Monday in a statement, noting that it filed its complaint before the US
District Court for the Western District of Washington. The lawsuit comes two weeks after Bittrex announced that it was winding down its US operations, blaming unclear regulatory requirements.
According to the SEC’s
complaint, Bittrex since at least 2014 enabled the buying and selling of
cryptocurrencies offered as securities on its platform. The cryptocurrency made
about $1.3 billion in revenue between 2017 and 2022 while serving its clients
as a broker, exchange and clearing agency.
The cryptocurrency exchange
generated the revenue from transaction fees charged on investors, including
those from the United States, among other sources of revenue. However, neither of the
services run simultaneously by Bittrex were registered, SEC pointed out.
SEC explained that Bittrex and
Bittrex Global should have registered as a brokerage because they connected
multiple buy and sell securities orders through a central system. On the other
hand, the platform should have registered as a broker because it “regularly
engaged in the business of effecting transactions for the accounts of others in
crypto assets that were offered and sold as securities.”
Furthermore, the financial watchdog
noted that Bittrex should have filed for registration as a clearing agency as
it facilitated payments and deliveries after matching buy and sell orders. In
addition, acting as a custodian of customer digital assets demanded clearing agency registration, the regulator said.
The US securities regulator has
charged cryptocurrency exchange Bittrex
and William Shihara, its Founder and former CEO, for operating as a national
securities exchange, broker and clearing agency without registration.
According to US Securities and Exchange Commission (SEC), Bittrex violated
registration requirements of the US federal securities law, instructed crypto
issuers using its platform to delete certain information that indicated their
digital assets were securities, and ran different market intermediary functions
under one entity in order to maximize profits.
The regulator also filed charges
against Bittrex Global GmbH, a foreign affiliate of the digital asset firm, for joining hands
with Bittrex to operate a single shared order book–a central system that
allows traders to submit buy and sell orders for a particular asset or
security–without registering as a national securities exchange.
The SEC announced the lawsuit on
Monday in a statement, noting that it filed its complaint before the US
District Court for the Western District of Washington. The lawsuit comes two weeks after Bittrex announced that it was winding down its US operations, blaming unclear regulatory requirements.
According to the SEC’s
complaint, Bittrex since at least 2014 enabled the buying and selling of
cryptocurrencies offered as securities on its platform. The cryptocurrency made
about $1.3 billion in revenue between 2017 and 2022 while serving its clients
as a broker, exchange and clearing agency.
The cryptocurrency exchange
generated the revenue from transaction fees charged on investors, including
those from the United States, among other sources of revenue. However, neither of the
services run simultaneously by Bittrex were registered, SEC pointed out.
SEC explained that Bittrex and
Bittrex Global should have registered as a brokerage because they connected
multiple buy and sell securities orders through a central system. On the other
hand, the platform should have registered as a broker because it “regularly
engaged in the business of effecting transactions for the accounts of others in
crypto assets that were offered and sold as securities.”
Furthermore, the financial watchdog
noted that Bittrex should have filed for registration as a clearing agency as
it facilitated payments and deliveries after matching buy and sell orders. In
addition, acting as a custodian of customer digital assets demanded clearing agency registration, the regulator said.
