The SEC, an executioner who cuts you to pieces. No one is supposed to ignore the law of the SEC (Securities Exchange Commission), even if nothing is written down. In this case, the Commission is relentless in its pursuit of all exchanges that have offered cryptos for sale, be they judge as securities (financial security). Even if nothing has yet been established as such in the USA. Bittrex unfortunately paid the price throughout 2023. Here’s how it happened.
Crypto exchanges hammered by SEC…
In 2023, the Bittrex exchange celebrated 9 years in the crypto universe. The one that withstood all the bloody bear markets finally got knocked out by the hammer of regulation. Founded in 2013, Bittrex had managed to avoid hacks, to keep its customers’ funds safe. It failed to tame the Gensler dragon.
Last April, feeling the wind shift, the exchange declared its definitive departure from the USA. Bittrex had announced that it would be leaving the USA for good. to close its doors to US citizens. That didn’t stop the SEC, the godfather of regulation, from coming after him less than two weeks later to demand wads of cash.
In mid-April, before Bittrex escaped, the SEC rushed to sue Bittrex. The latter accused the exchange of providing services unregistered as securities to its American customers. The armed wing of the government made no secret of the objective behind these attacks: » send a message « particularly aggressive to exchanges. Simply put, you’re not welcome in America. Go back, but first, give us your money. Bittrex was quick to point out the SEC’s uncoordinated, expeditious methods.
In the end, the SEC got its way. Sinked by the regulator, Bittrex filed for bankruptcy in May 2023. During the trial, the SEC even demanded that the exchange pay its fines before customers could withdraw their funds. Fortunately, the judge didn’t hear it that way and allowed Bittrex to become operational again in mid-June, allowing customers to withdraw their funds. It’s a good thing customers come before the SEC’s unjustified fines.
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… finish to give up the crypto fight. Or not.
Today, after months of litigation and despite its complicated situation, Bittrex’s leaders have accepted to pay the fine of 24 million dollars claimed by the financial regulator. The $24 million includes $14.4 million in adjustment penalties, $4 million in damages and $5.6 million in civil penalties.
Bittrex has 90 days after the approval of its liquidation plan to pay the sums « due » to the SEC. All this with a final deadline of 1er March 2024.
Gubir Grewal, head of the SEC’s enforcement department, commented on the outcome of the trial.
« I am grateful to the SEC teams for aggressively pursuing non-compliance within the crypto industry, for resolving this case, and for bringing relief to aggrieved investors. »
Aggrieved by what? Mystery. The SEC has leveled similar charges at crypto exchanges Binance and Coinbase, themselves mired in a lawsuit against the regulator.
However, Coinbase is currently attempting to demonstrate the SEC’s inability to have authority over such matters. Bittrex is supporting Coinbase in this battle. Their objective is simple: to capitalize on their legal strengths in the face of the US financial regulators and strengthen their defense. In the long run, this will enable them to demonstrate their case, the SEC’s inability to regulate the sector.
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