Four months after SEC sued Bittrext and its CEO, both parties reached a $24 million settlement.
Bittrex, a notable crypto trading platform, alongside its co-founder and ex-CEO William Shihara, has settled a legal confrontation with the US Securities and Exchange Commission (SEC). This settlement revolves around allegations of operating without registration.
In an official release dated August 10th, the SEC unveiled the terms of the agreement. According to the notice, Bittrex and its international counterpart, Bittrex Global, will disburse $14.4 million in disgorgement, $5.6 million as civil penalties, and an additional $4 million in prejudgment interest. The settlement, however, still requires court endorsement.
Did you know?
Want to get smarter & wealthier with crypto?
Subscribe - We publish new crypto explainer videos every week!
What is a Crypto Bull Run? (Animated Explainer + Prediction)
When commenting on the settlement, Gubir Grewal, the SEC's enforcement director, stated:
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.
He emphasized the importance of economic realities over labels, asserting:
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.
Shihara, who led Bittrex from its 2014 inception until 2019, commented on the settlement calling the resolution a “good outcome” and emphasized the significance of striking a chord between spurring innovation and safeguarding consumers in the US.
Earlier in April, the SEC accused both Bittrex and Shihara of running an unlicensed national securities exchange, broker, and clearing agency. Furthermore, the SEC initiated a separate enforcement action against Bittrex Global regarding its operation of a shared order book in association with Bittrex.
Further adding to Bittrex’s regulatory challenges, the US Department of the Treasury’s entities had acted against the platform in October 2022, culminating in a $29-million agreement. After this, in March, Bittrex announced its intention to cease US operations in April, attributing the decision to the nation's regulatory landscape. By May, the firm has filed for Chapter 11 bankruptcy.
The SEC continues its vigilance regarding the crypto sector, with several ongoing legal proceedings against prominent entities like Binance, Coinbase, Ripple Labs, and Terraform Labs. This stance has evoked mixed reactions, with a fraction of US lawmakers and industry stalwarts questioning the SEC’s “regulation by enforcement” methodology in the crypto sector.
