Bittrex Settles with SEC

Crypto trading platform Bittrex and its former CEO William Shihara, have agreed to settle charges brought by the US Securities and Exchange Commission (SEC), that they operated an unregistered securities exchange, broker and clearing agency. The settlement, which is subject to court approval, will see Bittrex and its foreign affiliate, Bittrex Global, pay penalties of $24 million, including a disgorgement of $14.4 million, prejudgment interest of $4 million, and a civil penalty of $5.6 million. The defendants neither admit nor deny the SEC’s allegations, while settling.

The SEC alleged in its Complaint that Bittrex provided US investors with access to crypto assets that were offered, the regulator claims, as securities. This reinforces the SEC stance that a lot of crypto assets are securities and that it, rather than another US agency, should regulate the market.

The complaint further alleges that Bittrex and Shihara, who was the company’s CEO from 2014 to 2019, directed issuers who sought to have their crypto assets made available for trading on Bittrex’s platform to first delete from public channels certain “problematic statements” that Shihara believed would lead a regulator, such as the SEC, to investigate whether the crypto asset was offered and sold as a security.

“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,” says Gurbir Grewal, director of the SEC’s Division of Enforcement. “Today’s settlement makes clear that you cannot escape liability by simply changing labels or altering descriptions because what matters is the economic realities of those offerings.”