SEC Takes Legal Action Against Bittrex, Warned the Company Before it Exited the US Market

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One of the biggest crypto platforms in the USA, Bittrex, will shut its doors on April 30. After nearly a decade of operations, it is shutting down business with a possible SEC lawsuit to follow. The SEC is clamping down on crypto, leading a tirade against companies and pushing them to sign up as an exchange or broker. Bittrex did nothing, and the SEC said it violated US laws, leading to its shutdown.

It wasn’t the first time the SEC clamped down on an exchange. It simply doesn’t like it when companies don’t respect US laws or violate federal statutes. Besides shutting Bittrex down, its former CEO and Bittrex Global GmBH will also face charges.

Working to Delete Controversial Statements

Before the SEC put the clamps on Bittrex, the company was apparently working with others to delete problematic statements. These statements were things the SEC would investigate. They included expectation of profit and price predictions. It’s the reason why the SEC acted, telling Bittrex that it should have been registered as a broker or exchange to trade cryptocurrencies. Additionally, the watchdog claims it warned the company before taking it down, although Bittrex claims otherwise.

The SEC is infamous for its crypto shakedowns. It doesn’t like it when companies’ business models are not based on its recommendations. In short, it treats cryptocurrencies as securities, so in order for a company to trade in them, it must be registered as an exchange or a broker.

Just last month, Bittrex announced its exit from the US market. It cited the current US regulatory and economic environment as the issue. However, the real reason behind it was the SEC action taken against the company. The past weekend, Bittrex revealed that it has received a Wells notice in March. The Wells notice is an official SEC document that shows evidence of legal violations. The company plans on fighting the suit unless the SEC provides a reasonable settlement.

That’s pushing it too far if you ask experts, as the SEC never intends on settling with companies who violate the laws. More importantly, it hates crypto firms not registered as brokers or exchanges, and since Bittrex did neither, it brought trouble upon itself.

Reminiscent of Beaxy

The latest SEC pursuit is reminiscent of the action taken recently against Beaxy. This company faced similar challenges. Similar charges were brought against Coinbase, the largest exchange in the USA, which has just received a Wells notice.

According to the SEC, DASH, Tokencard, omise go, and algorand are all securities. Right after the SEC announced this, Algorand dropped 2.5%. But, according to Bittrex, the regulator refused to flag the tokens it thought were securities. In a public statement, the company said that it asked the SEC to provide context for the legal action taken against Bittrex. More specifically, Bittrex asked the SEC to tell the company which of its assets are viewed as securities so they can be delisted. But, the SEC didn’t provide an answer, instead opting to charge the company.

Of course, it was a harmful decision, and one that will hurt US crypto fans, traders, and employees. It’s another nail in the crypto coffin led by the US watchdog.

April 19, 2023: • No Comments

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