Digital assets exchange, Bittrex, alongside its former CEO William Shihara, has reached a $24 million agreement with the US SEC amid registration issues.
The SEC lodged its complaint in the US District Court for the Western District of Washington on April 17, 2023. The lawsuit alleged that from 2014 to 2019, Bittrex’s services to American investors involving crypto assets deemed as securities were unregistered.
Moreover, the CEO reportedly urged asset issuers to remove “problematic statements” from their public channels, aiming to elude SEC scrutiny over classifying these cryptocurrencies as securities.
On Aug. 11, the SEC revealed that Bittrex agreed to settle the complaint by paying $24 million.
Bittrex Global GmbH, an affiliate of Bittrex Inc., acknowledged as part of the settlement that it had failed to register as a national securities exchange. However, the defendants neither admitted nor denied the allegations.
Gurbir S. Grewal, the head of the SEC’s enforcement division, commented on the settlement. He noted Bittrex’s attempts to alter token issuers’ public statements to bypass federal securities regulations. He emphasized that changing labels or descriptions does not exempt parties from legal responsibility.
In March, Bittrex announced its intention to end U.S. operations, leading to a surge in withdrawal requests. This culminated in the cryptocurrency exchange filing for bankruptcy on May 8, revealing $300 million in client cash and bitcoin holdings as of May 10.
After the U.S. government opposed Bittrex’s efforts to allow customers access to their assets due to unpaid sanctions-related penalties, a Delaware bankruptcy court’s ruling on June 13 permitted the exchange to facilitate withdrawals for uncontested claims.
However, the judgment did not finalize ownership of the assets, potentially paving the way for future legal complications.