Topline
Cryptocurrency exchange Bittrex agreed Thursday to pay $24 million to settle charges from the Securities and Exchange Commission that accused it of operating an unregistered national securities exchange—one of several crypto platforms to face allegations from the SEC within the last year.
Bittrex was first charged in April over accusations it operated as an unregistered national … [+]
Key Facts
Bittrex allegedly operated as an unregistered broker, national securities exchange and securities intermediary, according to a filing, which claimed the platform earned at least $1.3 billion in revenues from investor transaction fees.
Regulators alleged Bittrex and its co-founder and former CEO, William Shihara, directed issuers who wanted their crypto assets available for trading to delete “problematic statements”—ones related to price predictions, expectations of profit and other investment related terms—from public channels, as Shihara believed such wording would spark an investigation by regulators.
Bittrex and Bittrex Global agreed to pay separate fines of $14.4 million, $4 million, and a civil penalty of $5.6 million—all of which added up to a $24 million payment.
Bittrex and Shihara did not admit to or deny the SEC’s accusations.
Crucial Quote
“For years, Bittrex worked with token issuers to ‘scrub’ their online statements of any indicia that they were investment contracts—all in an effort to evade the federal securities laws. They failed,” Gurbir S. Grewal, director of the SEC’s Division of Enforcement, said in a statement.
Contra
“This is a good outcome,” Shihara told Forbes. “It’s vital that our country strikes a balance between fostering innovation, encouraging entrepreneurs and the need to protect consumers, and I hope today’s proposed settlement helps move that forward.”
Key Background
The settlement comes about four months after Bittrex was first charged by the SEC over claims it failed to register as a national securities exchange. Prosecutors largely scrutinized the company’s alleged attempts to manipulate the marketing language about its offerings. Bittrex joins a growing list of crypto firms that have been pressured by the SEC, which has argued most cryptocurrencies, with the exception of bitcoin, should be legally considered as securities. Late last month, prosecutors charged crypto influencer Richard Heart with illegally raising more than $1 billion in unregistered securities and spending investor funds on expensive items including a rare 555.55-carat black diamond.
Further Reading
SEC Sues Crypto Founder For Using Funds On Luxury Purchases—Including A 555-Carat Black Diamond (Forbes)
SEC Sues Binance For Multiple U.S. Rule Violations (Forbes)