The SEC Sets Its Sights On Bittrex

Seattle-based cryptocurrency exchange Bittrex has reportedly been notified of a potential enforcement action by the U.S. Securities and Exchange Commission (SEC). The SEC has alleged that the exchange acted as an exchange, broker-dealer, and clearinghouse without registering with the regulator.

The potential enforcement action was reportedly notified to Bittrex in March 2023 via a Wells notice, and the exchange announced on March 31, 2023, that it would be shutting down, citing the “current U.S. regulatory and economic environment.” Bittrex co-founder and CEO Richie Lai tweeted that it was not “economically viable” to continue to operate in the U.S.

Meanwhile, the SEC requires cryptocurrency firms like Bittrex to register with the regulator to help reduce conflicts of interest and make crypto exchanges look more like traditional stock exchanges. However, there is a lack of regulatory clarity, which results in substantial costs and no certainty as to what can and can’t be offered, according to Bittrex’s General Counsel, David Maria.

Bittrex is unsure if the SEC will file a lawsuit due to the company winding down its U.S. operations. However, Maria stated that his company would take this matter to the courts unless regulators “came with a reasonable settlement offer.”

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Bittrex had reportedly explored the option of registering its operations with the SEC late last year but discovered that it was not a viable option as they’d have to essentially cease all revenue-producing activities.

This latest SEC investigation comes after Bittrex was fined $53 million last year due to “apparent violations” of multiple U.S. sanctions programs. The exchange had allegedly failed to monitor suspicious crypto transactions from persons located in Cuba, Iran, Sudan, Syria, and the Crimea region of Ukraine, allowing them to engage in over $263 million worth of transactions from March 2014 to December 2017.

Additionally, the SEC also fined Bittrex for failing to have a sufficient anti-money laundering program, which reportedly led to the exchange having “significant exposure to illicit finance.”


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