Admitted fault and settled U.S. exchange Bittrex fined $24 million in settlement with SEC

Bittrex, a U.S. exchange, fined $24 million in SEC settlement.

Author: Felix, LianGuaiNews

Unlike Coinbase and Binance US, who continue to challenge the US regulatory agency SEC, another well-established US exchange, Bittrex, has chosen to pay a fine and settle with the SEC. Earlier, they had announced their withdrawal from the US market.

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

Previously, in April, the US 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-dealer, and clearing agency without registration. The SEC claimed that Bittrex had generated at least $1.3 billion in illegal revenue from 2017 to 2022. Similar to the lawsuits against Coinbase and Binance, the SEC also claimed that some of the assets provided by Bittrex were unregistered securities.

Gurbir S. Grewal, the Director of Enforcement at the US SEC, stated in a statement: “For years, Bittrex has worked with token issuers to ‘scrub’ from online statements any indications that they are investment contracts, all in an effort to evade federal securities laws. Today’s settlement makes clear that they cannot evade responsibility simply by relabeling or redefining these products because what matters is the economic realities of the transactions. We appreciate SEC staff’s active pursuit of wrongdoing in the cryptocurrency industry and the additional relief it brings to harmed investors.”

According to court documents, Bittrex neither admits nor denies these allegations and cannot make any public statements that may suggest that the SEC’s allegations are without factual basis. Bittrex must make the payment to the SEC within 90 days after the effective date of its liquidation plan. However, if the fees and fines are not paid by March 1st of next year, the regulatory agency may seek a court judgment.

Bittrex Global stated in a statement: “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 stated in a statement: “This is a good outcome. It is critical that we strike a balance between promoting innovation, encouraging entrepreneurship, and protecting consumers in our nation. 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 United States, with a market share of nearly 23% in USD-supported markets as of early 2018. However, it has been plagued by regulatory agencies and US authorities since 2022.

In 2022, Bittrex agreed to pay $29 million to settle enforcement cases with US authorities for “apparent violations” of sanctions against Iran, Cuba, Syria, and other countries.

In March 2023, Bittrex announced the closure of its US operations. In May of this year, Bittrex filed for bankruptcy in Delaware, USA. However, this will not affect Bittrex Global’s operations, and Bittrex will continue to serve customers outside the United States. According to court documents provided by bankruptcy tracking agency Chapter 11 Dockets, Bittrex has over 100,000 creditors, and its assets and liabilities are estimated to be between 500 million and 1 billion US dollars. Additionally, Bittrex stated that it is economically unfeasible to continue operating the exchange under the “current US regulatory and economic environment.” Currently, Bittrex is in the bankruptcy process.

It is reported that before reaching a settlement, cryptocurrency investment company LianGuairadigm came forward to defend Bittrex, claiming that the SEC exceeded its jurisdiction. In July, LianGuairadigm wrote, “The SEC lacks the power to regulate secondary markets for cryptocurrency assets because they do not involve ‘investment contracts’ and therefore do not fall within the jurisdiction of the organization for securities transactions.”

Reference sources: Decrypt, The Block, CoinDesk, Blockworks

Related reading: Bittrex’s Bankruptcy Application Misunderstood: Actually Exiting the US Market and Planning to Counter SEC Accusations