04-18-2023, 06:51 AM
SEC Sues Crypto Exchange Bittrex, CEO for Operating without Registration
<p class="MsoNormal">The US securities regulator has
charged cryptocurrency exchange Bittrex
and William Shihara, its Founder and former CEO, for operating as a national
securities exchange, broker and clearing agency without registration. </p><p class="MsoNormal">
According to US Securities and Exchange Commission (SEC), Bittrex violated
registration requirements of the US federal securities law, instructed crypto
issuers using its platform to delete certain information that indicated their
digital assets were securities, and ran different market intermediary functions
under one entity in order to maximize profits.</p><p class="MsoNormal">The regulator also filed charges
against Bittrex Global GmbH, a foreign affiliate of the digital asset firm, for joining hands
with Bittrex to operate a single shared order book--a central system that
allows traders to submit buy and sell orders for a particular asset or
security--without registering as a national securities exchange. </p><p class="MsoNormal">The SEC announced the lawsuit on
Monday in <a href="https://www.sec.gov/news/press-release/2023-78" target="_blank" rel="follow">a statement</a>, noting that it filed its complaint before the US
District Court for the Western District of Washington. The lawsuit comes two weeks after Bittrex announced that it was <a href="https://www.financemagnates.com/cryptocurrency/bittrex-exists-us-market-amid-regulatory-woes/" target="_blank" rel="follow">winding down its US operations</a>, blaming unclear regulatory requirements.</p><p class="MsoNormal text-align-justify">Bittrex Made $1.3B from Unregistered Services: SEC</p><p class="MsoNormal">According to <a href="https://www.sec.gov/litigation/complaints/2023/comp-pr2023-78.pdf" target="_blank" rel="follow">the SEC’s
complaint</a>, Bittrex since at least 2014 enabled the buying and selling of
cryptocurrencies offered as securities on its platform. The cryptocurrency made
about $1.3 billion in revenue between 2017 and 2022 while serving its clients
as a broker, exchange and clearing agency. </p><p class="MsoNormal">The cryptocurrency exchange
generated the revenue from transaction fees charged on investors, including
those from the United States, among other sources of revenue. However, neither of the
services run simultaneously by Bittrex were registered, SEC pointed out.</p><blockquote class="twitter-tweet"><p lang="en" dir="ltr">1/ I just read the 56-page complaint file by the <a href="https://twitter.com/SECGov?ref_src=twsrc%5Etfw">@SECGov</a> against <a href="https://twitter.com/BittrexExchange?ref_src=twsrc%5Etfw">@BittrexExchange</a>.Here's what you need to know.The complaint names as defendants Bittrex, Inc., Bittrex Global GMBH, and William Shihara--who co-founded Bittrex in 2014.and...</p>— MetaLawMan (@MetaLawMan) <a href="https://twitter.com/MetaLawMan/status/1647989473970384899?ref_src=twsrc%5Etfw">April 17, 2023</a></blockquote><p class="MsoNormal">SEC explained that Bittrex and
Bittrex Global should have registered as a brokerage because they connected
multiple buy and sell securities orders through a central system. On the other
hand, the platform should have registered as a broker because it “regularly
engaged in the business of effecting transactions for the accounts of others in
crypto assets that were offered and sold as securities.”</p><p class="MsoNormal">Furthermore, the financial watchdog
noted that Bittrex should have filed for registration as a clearing agency as
it facilitated payments and deliveries after matching buy and sell orders. In
addition, acting as a custodian of customer digital assets demanded clearing agency registration, the regulator said.</p><p class="MsoNormal text-align-justify">SEC Accuses Bittrex of Evading Securities Rules</p><p class="MsoNormal">In its complaint, the SEC also
alleged that Bittrex and Shihara, who was the company’s CEO between 2014 and
2019, helped its crypto issuers to delete certain “problematic statements” from
their public channels. These were statements Shihara believed could make the digital asset offerings categorized and investigated as securities. </p><p class="MsoNormal">“For example, in an effort to
avoid regulatory scrutiny, before Bittrex would make an asset available on its
platform, Bittrex and Shihara instructed issuer-applicants to delete statements
related to ‘price prediction[s],’ ‘expectation of profit,’ and other
‘investment related terms,’” SEC explained.</p><p class="MsoNormal">Speaking on the case, Gary
Gensler, SEC Chair, noted that the case shows that cryptocurrency markets were
suffering from a lack of regulatory compliance and not that of regulatory
clarity. </p><p class="MsoNormal">"As alleged in our
complaint, Bittrex and issuers that it worked with knew the rules that applied
to them but went to great lengths to evade them by directing issuer-applicants
to ‘scrub' offering materials of information indicating that certain crypto
assets were securities,” Gensler noted.</p><p class="MsoNormal text-align-justify">Bittrex to Head to Court</p><p class="MsoNormal">Reacting to the development,
Richie Lai, the Co-Founder and CEO of Bittrex, noted that the cryptocurrency
exchange made efforts for years to work with the SEC on what was securities. Lai, therefore, criticized the SEC’s action, noting that “this isn’t how
gov’ts are supposed to work.” He added that Bittrex will challenge SEC’s action
in court.</p><blockquote class="twitter-tweet"><p lang="en" dir="ltr">FTR, we’ve been trying to work with the SEC for years on what they thought were securities. Now? They sue us after we announce we are leaving the US. This isn’t how gov’ts are supposed to work. We look forward to fighting this in court<a href="https://twitter.com/BittrexExchange?ref_src=twsrc%5Etfw">@BittrexExchange</a></p>— Richie Lai (@richiela) <a href="https://twitter.com/richiela/status/1647991926883516418?ref_src=twsrc%5Etfw">April 17, 2023</a></blockquote><p class="MsoNormal">In a statement released later on Monday, Bittrex further noted that securities were not offered or traded on its platform and neither did the exchange offer any products that were investment contracts. The firm also said the regulator failed to tell the exchange which of its specific conducts amount to violation of federal securities law despite making such request for over five years.</p><p class="MsoNormal">"Specifically, on multiple occasions, we asked them to tell us what digital assets on our platform they viewed as securities, so that we could review and potentially delist them. They refused to do so," Bittrex noted in the statement, adding that it "operated within the parameters of the law at all times."</p><p class="MsoNormal">SEC’s action against Bittrex
comes less than a month after the Commodity Futures and Trading Commission <a href="https://www.financemagnates.com/cryptocurrency/cftc-sues-binance-for-illegal-derivatives-exchange-numerous-violations/" target="_blank" rel="follow">charged Binance and CEO Changpeng Zhao</a> with operating an illegal digital asset
derivatives exchange. The regulator also accused Binance of insider trading and
market manipulation--<a href="https://www.financemagnates.com/cryptocurrency/binance-ceo-calls-cftc-lawsuit-an-incomplete-recitation-of-facts/" target="_blank" rel="follow">allegations Zhao dismissed</a>, calling them “an incomplete recitation of facts.”</p><p class="MsoNormal">SEC is also putting regulatory
pressures on other cryptocurrency exchanges and digital asset lenders in the United States,
including <a href="https://www.financemagnates.com/cryptocurrency/regulation/coinbase-expects-enforcement-action-amid-secs-wells-notice/" target="_blank" rel="follow">Coinbase</a>, <a href="https://www.financemagnates.com/cryptocurrency/kraken-faces-sec-probe-over-unregistered-securities-listings/" target="_blank" rel="follow">Kraken</a>, <a href="https://www.financemagnates.com/cryptocurrency/sec-takes-gemini-genesis-to-court-for-selling-unregistered-securities/" target="_blank" rel="follow">Gemini and Genesis</a>, among others, noting that their crypto offerings are unregistered securities.</p><p class="MsoNormal">Meanwhile, Bittrex over the year has exited many countries, citing regulatory reasons. In 2020, the
cryptocurrency exchange <a href="https://www.financemagnates.com/cryptocurrency/news/bittrex-to-stop-services-in-belarus-and-ukraine/" target="_blank" rel="follow">exited seven countries</a>, including
Belarus and Ukraine. A year earlier, the firm <a href="https://www.financemagnates.com/cryptocurrency/exchange/bittrex-to-halt-crypto-trading-services-in-31-countries/" target="_blank" rel="follow">terminated its services in 31 countries</a>, including Afghanistan, Egypt and Trinidad and
Tobago.</p><p class="MsoNormal">Virtu Integrates Appital; R3 in Qatar; <a href="https://www.financemagnates.com/forex/news-nuggets-17-april-virtu-integrates-appital-r3-in-qatar/" target="_blank" rel="follow">read today's new nuggets</a>.</p>
This article was written by Solomon Oladipupo at www.financemagnates.com.
https://www.financemagnates.com//cryptoc...istration/
<p class="MsoNormal">The US securities regulator has
charged cryptocurrency exchange Bittrex
and William Shihara, its Founder and former CEO, for operating as a national
securities exchange, broker and clearing agency without registration. </p><p class="MsoNormal">
According to US Securities and Exchange Commission (SEC), Bittrex violated
registration requirements of the US federal securities law, instructed crypto
issuers using its platform to delete certain information that indicated their
digital assets were securities, and ran different market intermediary functions
under one entity in order to maximize profits.</p><p class="MsoNormal">The regulator also filed charges
against Bittrex Global GmbH, a foreign affiliate of the digital asset firm, for joining hands
with Bittrex to operate a single shared order book--a central system that
allows traders to submit buy and sell orders for a particular asset or
security--without registering as a national securities exchange. </p><p class="MsoNormal">The SEC announced the lawsuit on
Monday in <a href="https://www.sec.gov/news/press-release/2023-78" target="_blank" rel="follow">a statement</a>, noting that it filed its complaint before the US
District Court for the Western District of Washington. The lawsuit comes two weeks after Bittrex announced that it was <a href="https://www.financemagnates.com/cryptocurrency/bittrex-exists-us-market-amid-regulatory-woes/" target="_blank" rel="follow">winding down its US operations</a>, blaming unclear regulatory requirements.</p><p class="MsoNormal text-align-justify">Bittrex Made $1.3B from Unregistered Services: SEC</p><p class="MsoNormal">According to <a href="https://www.sec.gov/litigation/complaints/2023/comp-pr2023-78.pdf" target="_blank" rel="follow">the SEC’s
complaint</a>, Bittrex since at least 2014 enabled the buying and selling of
cryptocurrencies offered as securities on its platform. The cryptocurrency made
about $1.3 billion in revenue between 2017 and 2022 while serving its clients
as a broker, exchange and clearing agency. </p><p class="MsoNormal">The cryptocurrency exchange
generated the revenue from transaction fees charged on investors, including
those from the United States, among other sources of revenue. However, neither of the
services run simultaneously by Bittrex were registered, SEC pointed out.</p><blockquote class="twitter-tweet"><p lang="en" dir="ltr">1/ I just read the 56-page complaint file by the <a href="https://twitter.com/SECGov?ref_src=twsrc%5Etfw">@SECGov</a> against <a href="https://twitter.com/BittrexExchange?ref_src=twsrc%5Etfw">@BittrexExchange</a>.Here's what you need to know.The complaint names as defendants Bittrex, Inc., Bittrex Global GMBH, and William Shihara--who co-founded Bittrex in 2014.and...</p>— MetaLawMan (@MetaLawMan) <a href="https://twitter.com/MetaLawMan/status/1647989473970384899?ref_src=twsrc%5Etfw">April 17, 2023</a></blockquote><p class="MsoNormal">SEC explained that Bittrex and
Bittrex Global should have registered as a brokerage because they connected
multiple buy and sell securities orders through a central system. On the other
hand, the platform should have registered as a broker because it “regularly
engaged in the business of effecting transactions for the accounts of others in
crypto assets that were offered and sold as securities.”</p><p class="MsoNormal">Furthermore, the financial watchdog
noted that Bittrex should have filed for registration as a clearing agency as
it facilitated payments and deliveries after matching buy and sell orders. In
addition, acting as a custodian of customer digital assets demanded clearing agency registration, the regulator said.</p><p class="MsoNormal text-align-justify">SEC Accuses Bittrex of Evading Securities Rules</p><p class="MsoNormal">In its complaint, the SEC also
alleged that Bittrex and Shihara, who was the company’s CEO between 2014 and
2019, helped its crypto issuers to delete certain “problematic statements” from
their public channels. These were statements Shihara believed could make the digital asset offerings categorized and investigated as securities. </p><p class="MsoNormal">“For example, in an effort to
avoid regulatory scrutiny, before Bittrex would make an asset available on its
platform, Bittrex and Shihara instructed issuer-applicants to delete statements
related to ‘price prediction[s],’ ‘expectation of profit,’ and other
‘investment related terms,’” SEC explained.</p><p class="MsoNormal">Speaking on the case, Gary
Gensler, SEC Chair, noted that the case shows that cryptocurrency markets were
suffering from a lack of regulatory compliance and not that of regulatory
clarity. </p><p class="MsoNormal">"As alleged in our
complaint, Bittrex and issuers that it worked with knew the rules that applied
to them but went to great lengths to evade them by directing issuer-applicants
to ‘scrub' offering materials of information indicating that certain crypto
assets were securities,” Gensler noted.</p><p class="MsoNormal text-align-justify">Bittrex to Head to Court</p><p class="MsoNormal">Reacting to the development,
Richie Lai, the Co-Founder and CEO of Bittrex, noted that the cryptocurrency
exchange made efforts for years to work with the SEC on what was securities. Lai, therefore, criticized the SEC’s action, noting that “this isn’t how
gov’ts are supposed to work.” He added that Bittrex will challenge SEC’s action
in court.</p><blockquote class="twitter-tweet"><p lang="en" dir="ltr">FTR, we’ve been trying to work with the SEC for years on what they thought were securities. Now? They sue us after we announce we are leaving the US. This isn’t how gov’ts are supposed to work. We look forward to fighting this in court<a href="https://twitter.com/BittrexExchange?ref_src=twsrc%5Etfw">@BittrexExchange</a></p>— Richie Lai (@richiela) <a href="https://twitter.com/richiela/status/1647991926883516418?ref_src=twsrc%5Etfw">April 17, 2023</a></blockquote><p class="MsoNormal">In a statement released later on Monday, Bittrex further noted that securities were not offered or traded on its platform and neither did the exchange offer any products that were investment contracts. The firm also said the regulator failed to tell the exchange which of its specific conducts amount to violation of federal securities law despite making such request for over five years.</p><p class="MsoNormal">"Specifically, on multiple occasions, we asked them to tell us what digital assets on our platform they viewed as securities, so that we could review and potentially delist them. They refused to do so," Bittrex noted in the statement, adding that it "operated within the parameters of the law at all times."</p><p class="MsoNormal">SEC’s action against Bittrex
comes less than a month after the Commodity Futures and Trading Commission <a href="https://www.financemagnates.com/cryptocurrency/cftc-sues-binance-for-illegal-derivatives-exchange-numerous-violations/" target="_blank" rel="follow">charged Binance and CEO Changpeng Zhao</a> with operating an illegal digital asset
derivatives exchange. The regulator also accused Binance of insider trading and
market manipulation--<a href="https://www.financemagnates.com/cryptocurrency/binance-ceo-calls-cftc-lawsuit-an-incomplete-recitation-of-facts/" target="_blank" rel="follow">allegations Zhao dismissed</a>, calling them “an incomplete recitation of facts.”</p><p class="MsoNormal">SEC is also putting regulatory
pressures on other cryptocurrency exchanges and digital asset lenders in the United States,
including <a href="https://www.financemagnates.com/cryptocurrency/regulation/coinbase-expects-enforcement-action-amid-secs-wells-notice/" target="_blank" rel="follow">Coinbase</a>, <a href="https://www.financemagnates.com/cryptocurrency/kraken-faces-sec-probe-over-unregistered-securities-listings/" target="_blank" rel="follow">Kraken</a>, <a href="https://www.financemagnates.com/cryptocurrency/sec-takes-gemini-genesis-to-court-for-selling-unregistered-securities/" target="_blank" rel="follow">Gemini and Genesis</a>, among others, noting that their crypto offerings are unregistered securities.</p><p class="MsoNormal">Meanwhile, Bittrex over the year has exited many countries, citing regulatory reasons. In 2020, the
cryptocurrency exchange <a href="https://www.financemagnates.com/cryptocurrency/news/bittrex-to-stop-services-in-belarus-and-ukraine/" target="_blank" rel="follow">exited seven countries</a>, including
Belarus and Ukraine. A year earlier, the firm <a href="https://www.financemagnates.com/cryptocurrency/exchange/bittrex-to-halt-crypto-trading-services-in-31-countries/" target="_blank" rel="follow">terminated its services in 31 countries</a>, including Afghanistan, Egypt and Trinidad and
Tobago.</p><p class="MsoNormal">Virtu Integrates Appital; R3 in Qatar; <a href="https://www.financemagnates.com/forex/news-nuggets-17-april-virtu-integrates-appital-r3-in-qatar/" target="_blank" rel="follow">read today's new nuggets</a>.</p>
This article was written by Solomon Oladipupo at www.financemagnates.com.
https://www.financemagnates.com//cryptoc...istration/