SEC Informs Bittrex of Possible Enforcement Action
In March, Bittrex’s General Counsel David Maria was notified of potential action from the SEC. By then, the Seattle-based crypto firm had already initiated the process of winding down its US operations, Maria explained.
Wells Notice Cites Unregistered Operations
In the Wells notice, the SEC alleged that Bittrex had violated laws by operating as an exchange, broker-dealer, and clearinghouse without registering with the regulator.
Bittrex’s Attempt to Comply with SEC Regulations
As per Maria, Bittrex discussed registering its operations with the SEC in late 2022. However, the firm found that complying with SEC regulations would require ceasing all revenue-generating activities in the country.
Lack of Regulatory Clarity Hinders Compliance
Maria emphasized that Bittrex’s inability to adhere to SEC regulations was due to the absence of clear crypto regulations in the first place. He stated, “The lack of regulatory clarity here results in substantial costs and no certainty as to what can and can’t be offered.” This resonates with Binance CEO Changpeng Zhao’s recent comments on regulatory enforcement.
Bittrex’s Future Legal Actions
It is unclear whether the SEC will proceed with a lawsuit now that Bittrex is ending its US operations. If the agency decides to take action, Bittrex will litigate unless a reasonable settlement offer is presented, according to Maria.
Bittrex’s US Operations Closure
Bittrex announced its decision to halt all US operations on March 31, citing a challenging regulatory and economic environment. The exchange advised US customers to withdraw their funds by April 30, 2023.
Due to continued regulatory uncertainty, we have made the difficult decision to wind down our U.S. operations, effective April 30, 2023. All funds are safe and can be fully withdrawn immediately.
— Bittrex (@BittrexExchange) March 31, 2023
Prior Legal Troubles for Bittrex
Before its exit from the US market, Bittrex had faced domestic legal issues. In 2022, the company agreed to pay over $29 million in fines to the US Department of the Treasury’s Office of Foreign Assets Control and Financial Crimes Enforcement Network for sanctions violations in Crimea, Cuba, Iran, Sudan, and Syria between 2014 and 2017.
Why is Bittrex facing potential SEC action?
The SEC’s enforcement division is considering recommending a lawsuit against Bittrex over alleged violations related to investor protection.
What is the Wells notice?
A Wells notice is a document from the SEC informing a company of potential enforcement action, citing violations of specific laws.
Why is Bittrex closing its US operations?
Bittrex is shutting down US operations due to the challenging regulatory and economic environment in the country.
What are Bittrex’s prior legal issues?
Bittrex faced legal issues in 2022, when it agreed to pay over $29 million in fines for sanctions violations in Crimea, Cuba, Iran, Sudan, and Syria between 2014 and 2017. The fines were imposed by the US Department of the Treasury’s Office of Foreign Assets Control and Financial Crimes Enforcement Network.
What happens if the SEC proceeds with a lawsuit against Bittrex?
If the SEC decides to take action, Bittrex will litigate unless a reasonable settlement offer is presented, according to General Counsel David Maria.
When does Bittrex advise US customers to withdraw their funds?
Bittrex has advised US customers to withdraw their funds by April 30, 2023, following the decision to halt all operations in the United States.