Crypto exchange Bittrex to settle SEC charges for US$24m

The US Securities and Exchange Commission (SEC) has confirmed that crypto exchange Bittrex and its co-founder and former CEO, William Shihara, have agreed a settlement for charges that they were operating as an unregistered national securities exchange, broker and clearing agency. 

Bittrex foreign affiliate, Bittrex Global GmbH, also agreed to settle charges that it failed to register as a national securities exchange.

According to the SEC, Bittrex was providing services to US investors in connection with crypto assets that were offered and sold as securities. Bittrex and Shihara (who was the company’s CEO from 2014 to 2019) are also accused of instructing potential clients to delete any “problematic statements” they may have published that might prompt regulators to investigate whether the crypto asset was offered and sold as a security. Bittrex and Shihara neither deny nor admit the allegations. 

“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,” said Gurbir S. 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. I am grateful to the SEC staff for aggressively pursuing non-compliance in the crypto industry, resolving this matter, and bringing additional relief to harmed investors.”

Bittrex and Bittrex Global have agreed to pay disgorgement of US$14.4m, prejudgment interest of US$4m and a civil penalty of US$5.6m.