Bittrex Faces Charges for Operating an Unregistered National Securities Exchange and Clearing Agency
The US Securities and Exchange Commission (SEC) has charged Seattle-based cryptocurrency exchange Bittrex and its former CEO, William Shihara, with operating an unregistered national securities exchange, broker, and clearing agency. In addition, the SEC has charged Bittrex’s foreign affiliate, Bittrex Global GmbH, for failing to register as a national securities exchange in connection with its operation of a single shared order book along with Bittrex.
According to the SEC’s complaint, which was filed in a US district court in Washington, Shihara coordinated with crypto asset issuers seeking to make their tokens available for trading on Bittrex’s platform to delete public statements that he believed would lead regulators to investigate those token offerings as securities. The complaint also alleged that Bittrex earned at least $1.3 billion in revenues from transaction fees from investors, among other things, while servicing them as a broker, exchange, and clearing agency from 2017 to 2022, but failed to register those activities with the SEC.
Bittrex had previously announced that it would shut down its US operations effective April 30 due to “continued regulatory uncertainty.” However, the company’s non-US operations are based in Liechtenstein.
In response to the charges, Shihara and a representative for Bittrex did not immediately respond to requests for comment. SEC Chair Gary Gensler said in a statement, “Today’s action, yet again, makes plain that the crypto markets suffer from a lack of regulatory compliance, not a lack of regulatory clarity.” Gensler has previously stated that companies that help facilitate transactions in the cryptocurrency market should register with the SEC like other market intermediaries.
Bittrex had previously agreed to pay $29 million in fines to the US Treasury Department for “apparent violations” of sanctions on certain countries and anti-money laundering law in October 2021. These charges highlight the need for regulatory compliance in the cryptocurrency market to protect investors and ensure fair trading practices.