Bittrex to pay a stark $24 million fine amid SEC's ongoing enforcement push against crypto industry

  • Bittrex crypto-asset trading platform has agreed to pay the SEC a fine of $24 million.
  • The penalty comes after the US SEC clamps down on platforms believed to be operating as unregistered brokers.
  • The financial regulator had brought the charges against the platform and its CEO, just like it did in the Binance case.

Bittrex cryptocurrency exchange is set to pay a heavy fine after the US Securities and Exchange Commission (SEC) accused the firm of violating securities laws. The penalty comes as the financial regulator continues to impose its enforcement actions on the cryptocurrency industry. Binance and Coinbase are among those targeted.

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Bittrex to pay a $24 million fine to the SEC

Like Coinbase exchange and Binance before it, the financial regulator had accused the Washington-based trading firm of operating unregistered securities, playing broker for unlicensed dealings. Specifically, the financial regulator's criminal charge claims that the platform "facilitated the trading of securities without prior registration by the SEC," adding that they failed to comply with the commission's rules and regulations.

Other allegations include evidence tampering, with the commission calling out the trading platform from instructing issuers of cryptocurrency assets to delete some statements from public reach capable of drawing the attention of regulators. According to the directive, such platforms include "price forecasts, profit expectations, and investment-related terms."

Notably, the SEC sued Binance and its CEO Changpeng Zhao (CZ) for the same crime, saying they commingled and diverted billions of dollars of customer funds to a third-party entity owned by CZ. Further, the SEC claimed that Binance moved around the users' crypto and fiat assets in ways other registered brokers would not.

Nevertheless, the world's largest crypto exchange fought the allegations, committing to fighting the charges with numerous development since the June 5 allegations, including the judge attempting to broker a compromise.

For its part, however, Bittrex has opted to pay the fine, as the SEC claims the exchange earned at least $1.3 billion from investors' transaction fees alone, while serving its clients in the US and overseas as a "broker, exchange, and clearing house," without SEC registration.

The $24 million fine is to be paid within two months of Bittrex Exchange filing a liquidation plan. It is worth to mention, however, that the firm neither admitted nor denied the claims, with no public statement issued that could point to the SEC lacking evidence for its allegations. A breakdown of the $24 million fine is that $14.4 million comprises disgorgement, $4 million goes to prejudgment interest on that disgorgement and $5.6 million toward civil money penalties.

Bitrexx subsidiary in the mix

Besides Bittrex, the SEC is also targeting the trading platform's subsidiary operating abroad, Bittrex Global GmbH, calling it for "failure to register as a notional stock exchange," citing operating a single joint order book with its parent firm, Bittrex.

Citing SEC enforcement director Gurbir Grewal on the matter:

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… 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.

Cryptocurrency prices FAQs

How do new token launches or listings affect cryptocurrency prices?

Token launches like Arbitrum’s ARB airdrop and Optimism OP influence demand and adoption among market participants. Listings on crypto exchanges deepen the liquidity for an asset and add new participants to an asset’s network. This is typically bullish for a digital asset.

How do hacks affect cryptocurrency prices?

A hack is an event in which an attacker captures a large volume of the asset from a DeFi bridge or hot wallet of an exchange or any other crypto platform via exploits, bugs or other methods. The exploiter then transfers these tokens out of the exchange platforms to ultimately sell or swap the assets for other cryptocurrencies or stablecoins. Such events often involve an en masse panic triggering a sell-off in the affected assets.

How do macroeconomic releases and events affect cryptocurrency prices?

Macroeconomic events like the US Federal Reserve’s decision on interest rates influence risk assets like Bitcoin, mainly through the direct impact they have on the US Dollar. An increase in interest rate typically negatively influences Bitcoin and altcoin prices, and vice versa. If the US Dollar index declines, risk assets and associated leverage for trading gets cheaper, in turn driving crypto prices higher.

How do major crypto upgrades like halvings, hard forks affect cryptocurrency prices?

Halvings are typically considered bullish events as they slash the block reward in half for miners, constricting the supply of the asset. At consistent demand if the supply reduces, the asset’s price climbs. This has been observed in Bitcoin and Litecoin.

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