Author:
The Securities and Exchange Commission (SEC) has signaled intent to file another lawsuit against a crypto industry heavyweight – this time being cryptocurrency exchange Bittrex.
The exchange, which announced the closure of its US operations last month, received a Wells Notice from the SEC at the time claiming it had violated investor protection laws.
Why Bittrex is Leaving America
As reported by the Wall Street Journal, Bittrex general counsel David Maria said that the SEC’s enforcement staff intended to recommend that the agency sue the company over investor protection violations.
Such violations included operating as an unregistered exchange, broker-dealer, and clearinghouse for securities. According to Maria, the SEC and Bittrex were in talks to discuss a path forward to registration since late 2022. Unfortunately, the company could not find a way to do so without essentially closing all of its revenue-generating services.
The agency has been investigating Bittrex since 2017 and has issued multiple subpoenas against the exchange to analyze how the firm makes money and determine which assets to list. Last October it was fined $53 million by the Treasury Department for having improper anti-money laundering controls in place.
On March 31, Bittex finally announced that it would close US operations due to an “uneven competitive landscape” created by regulatory hurdles and lack of clarity, making continued operations “no longer feasible.” Maria said the company had already planned to wind down operations before receiving the SEC’s Wells Notice.
“The lack of regulatory clarity here results in substantial costs and no certainty as to what can and can’t be offered,” he said.
Crypto lending platform Nexo was also forced to abandon operations in the United States last year after failing to find a path forward amid the “inconsistent and changing positions” of regulators in the country.
SEC VS Crypto Exchanges
Bittrex was one of the largest cryptocurrency exchanges in the world back in 2017 before later being surpassed by the likes of Coinbase, Kraken, and Binance.
Coinbase received a Wells Notice from the SEC last month for listing unregistered securities on its platform, and for failing to register its staking as a service product with the agency. Kraken was outright fined $30 million in February for providing a similar service.
Binance was later sued by the Commodities and Futures Trading Commission for facilitating commodities trades for customers within the United States – including Bitcoin and Ethereum – without proper registrations.
PrimeXBT Special Offer: Use this link to register & enter CRYPTOPOTATO50 code to receive up to $7,000 on your deposits.
