Crypto exchange Bittrex and CEO charged by SEC for violating federal laws, deleting “problematic statements”

• The Securities and Exchange Commission charge Bittrex with operating an unregistered national securities exchange, broker, and clearing agency.
• CEO William Shihara has been accused of deleting certain “problematic statements” related to “price prediction” and “expectation of profit”.
• Bittrex, on March 31, announced that it would be shutting down its US operations due to regulatory challenges.

The Securities and Exchange Commission’s (SEC) regulatory crackdown continues, with the crypto exchange Bittrex becoming the next target. Along with its CEO William Shihara, the platform has been charged by the SEC for failing to comply with multiple federal laws.

SEC charges Bittrex

The SEC in its press release, stated that the exchange and its head were operating an unregistered national securities exchange, broker, and clearing agency. Furthermore, the exchange’s foreign affiliate, Bittrex Global GmbH, also came under fire for failing to register as a national securities exchange.

According to the regulatory body, Bittrex earned nearly $1.3 billion in revenue by facilitating the buying and selling of crypto assets from 2017 to 2022.

However, the exchange and its CEO, Shihara, faced scrutiny beyond the violation of laws as the latter has been alleged to have erased critical information pertaining to the identification of crypto assets as securities. 

The Commission highlighted that Shihara coordinated along with the issuers to delete certain “problematic statements” from public channels. These statements included knowledge related to “price prediction[s],” “expectation of profit,” and other “investment related terms.”

The SEC chair Gary Gensler, in line with the aforementioned events, stated that the regulatory body’s actions were evidence that the crypto market has a lack of regulatory compliance and no regulatory clarity. He added,

“As alleged in our complaint, Bittrex and issuers that it worked with knew the rules that applied to them but went to great lengths to evade them by directing issuer-applicants to ‘scrub‘ offering materials of information indicating that certain crypto assets were securities. Further, Bittrex, as alleged, failed to register and comply with US securities laws as an exchange, broker-dealer, and clearing agency. Cosmetic alterations did nothing to change the underlying economic realities of the offerings and Bittrex’s conduct.”

The SEC’s actions came about two weeks after Bittrex announced that it would be ceasing its operations in the United States. The exchange cited regulatory challenges as the reason, which came after a slew of crypto companies faced the brunt of the regulatory bodies.

In the last few months, Terra and its CEO Do Kwon, Binance and its head Changpeng Zhao, as well as Tron and its founder Justin Sun have all been charged with securities and federal law violations.

This rising scrutiny at the hands of regulators has been considered one of the leading reasons why an alt season might fail to take place.

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