The U.S. Securities and Exchange Commission (SEC) confirmed a settlement with Bittrex Inc., a leading crypto trading platform, and its co-founder & ex-CEO, William Shihara, over allegations of operating without proper registrations. Bittrex Global GmbH, the international branch of Bittrex Inc., also settled charges for not registering as a securities exchange. While settling, Bittrex and Shihara haven’t admitted or denied the SEC’s claims.
The SEC’s official complaint, dated April 17, 2023, from the U.S. District Court for the Western District of Washington, highlights Bittrex‘s role as an unlicensed broker and clearing agency. The document alleges that Bittrex and William Shihara facilitated U.S. investors with crypto assets, which were potentially sold as securities. Between 2014-2019, under Shihara’s leadership, Bittrex allegedly advised crypto issuers to remove specific public statements that might attract regulatory scrutiny, especially from entities like the SEC.
Gurbir S. Grewal, the SEC’s Division of Enforcement Director, commented, “Bittrex’s attempts to sidestep federal securities regulations by modifying online content have been unsuccessful. The essence of offerings, not just their descriptions, determines their legal standing. I commend the SEC team for ensuring compliance in the crypto sector and providing relief to affected investors.“
The court-pending settlement includes permanent injunctions against Bittrex and Shihara under the Securities Exchange Act of 1934’s Sections 5, 15(a), and 17A. Bittrex Global is also enjoined under Section 5. Collectively, Bittrex and its global counterpart will pay a combined sum of $24 million, encompassing a disgorgement of $14.4 million, $4 million as prejudgment interest, and a $5.6 million civil penalty.
The Bittrex settlement has sparked a mixed reaction among the crypto ecosystem, including pro-crypto lawyer John Deaton. On X (formerly known as Twitter), he called out the agency, posing a somewhat rhetorical question surrounding the number of investors it has protected via the Bittrex crackdown.
The biggest SEC crypto targets are Coinbase and Binance. They have chosen to fight the regulator head-on, joining other pending high-profile crypto cases like the XRP lawsuit. Neither Coinbase nor Binance is ready to settle.
