Bittrex, a US-based cryptocurrency exchange, may face legal action from the US Securities and Exchange Commission (SEC) for allegedly violating investor protection regulations, despite the exchange’s plan to shut down its local operations.
According to a Wall Street Journal report released on April 16, the SEC’s enforcement division is leaning towards proposing a lawsuit against Bittrex. The company’s general counsel, David Maria, confirmed that Bittrex received a Wells notice from the SEC in March, informing them of a possible enforcement action for allegedly operating as an exchange, broker-dealer, and clearinghouse without registering with the regulator.
Bittrex had already made the decision to wind down its US operations due to the difficulties of operating under US regulators, who have taken enforcement action against over 100 cryptocurrency defendants in the past six years.
Before receiving the notification, Bittrex had already decided to wind down its US operations due to difficulties operating under US regulators who have taken enforcement action against over 100 cryptocurrency defendants within the past six years.
According to Maria, the company engaged in discussions with the SEC in late 2022 to explore options for registering its operations. However, the exchange ultimately found that complying with SEC regulations would require it to halt all revenue-generating activities in the US.
Maria argued that Bittrex’s non-compliance with SEC regulations was a result of the agency’s initial failure to establish clear guidelines for cryptocurrencies. He stated that the matter’s lack of regulatory clarity leads to significant expenses and a lack of assurance regarding permissible offerings.
Maria stated that if the SEC decides to take enforcement action against Bittrex, the company will litigate unless regulators present a reasonable settlement offer. However, whether the agency will take action remains uncertain since Bittrex is winding down its US operations.
On March 31, Bittrex announced that it would discontinue all its operations in the United States due to the challenging regulatory and economic environment. The company urged its US clients to withdraw their funds by April 30, 2023.
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