On Monday, the US Securities and Exchange Commission filed a civil lawsuit against Bittrex Inc, a cryptocurrency exchange, and its former CEO, William Shihara. The SEC alleges that the company operated an unregistered securities exchange and deleted public statements from issuers of cryptocurrencies to avoid attracting the attention of the SEC. The SEC accused Bittrex’s foreign subsidiary, Bittrex Global GmbH, of failing to register as a US securities exchange. Bittrex Global has denied the allegations, stating that it has no US customers and never gave the impression of doing business in the US.
The SEC lawsuit states that Bittrex generated at least $1.3 billion in transaction fee revenue from investors from 2017 to 2022 while serving them as a broker, exchange, and clearing agency. However, the company did not register these activities with the SEC. The lawsuit is pending in the United States District Court for the western part of Washington State under case number 2:23-cv-00580.
The SEC Chairman Gary Gensler stated that the lack of compliance in crypto markets is the issue, not regulatory clarity. He added that the SEC action on Monday demonstrates this problem. Bittrex announced in late March that it would cease operations in the US because of regulatory uncertainty.
The crypto industry in the US has undergone increased scrutiny by the US government recently, with actions taken against FTX, Kraken, and Binance. The US authority has demanded a ban on Binance operating in the USA.
