Bankrupt cryptocurrency exchange Bittrex and its CEO have reached a settlement with the Securities and Exchange Commission (SEC) for a sum of $24 million. This agreement comes after the SEC filed charges against the exchange in April for functioning as an unregistered trading platform.
In the court filing submitted on Thursday, neither the exchange nor its foreign affiliate, along with former CEO William Shihara, admitted or denied the allegations. Bittrex Global GmbH, the foreign affiliate, has also agreed to resolve the accusations, about its failure to register as a national securities exchange, according to an official statement by the SEC.
Gurbir S. Grewal, who heads the SEC’s enforcement division, emphasized that Bittrex had attempted to eliminate any indications that the token issuers’ online statements were linked to investment contracts, to evade federal securities regulations. This attempt was ultimately unsuccessful, leading to the charges. Grewal noted that the settlement highlights the significance of the economic realities behind such offerings, rather than merely altering labels or descriptions.
William Shihara expressed contentment with the settlement outcome in an emailed statement, regarding it as a positive resolution. He stressed the importance of achieving a balance between fostering innovation, supporting entrepreneurs, and safeguarding consumers. Shihara hoped that this settlement could contribute to advancing these goals.
Bittrex had applied for Chapter 11 bankruptcy protection in May, disclosing estimated assets and liabilities ranging between $500 million and $1 billion. The company had already revealed plans to withdraw from the U.S. market in March. At its peak, Bittrex accounted for nearly 23% of USD support in the cryptocurrency exchange market during the initial months of 2018.
The SEC has taken a strong stance against unregistered crypto exchanges, as demonstrated by their legal actions against Bittrex and, more recently, Coinbase in June. SEC Chair Gary Gensler has consistently underscored the necessity for compliance within the cryptocurrency sector.
He has highlighted that while trading platforms deal with various crypto tokens, they often lack the established safeguards against fraud and manipulation that are present in traditional financial markets. Gensler reiterated this concern during an interview with Bloomberg last month.
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