Crypto exchange Bittrex has agreed to a $24 million settlement with the U.S. Securities and Exchange Commission (SEC), bringing to a close allegations of offering unregistered securities to American investors.
The announcement, made on Thursday, comes within two months of Bittrex's bankruptcy filing and follows the trend of regulatory scrutiny facing cryptocurrency exchanges.
Bittrex, which filed for bankruptcy in May, was sued by the SEC earlier this year. The regulator's charges revolved around the simultaneous operation of the company as a securities exchange, broker, and clearinghouse without appropriate registration, allegations that have also been leveledd at Coinbase and Binance.US.
According to the settlement agreement, Bittrex neither admits nor denies the allegations. The terms also stipulate that Bittrex will have 90 days after its liquidation plan is effective to pay the SEC, and any delays may prompt the regulator to seek court judgment.
SEC Enforcement Director Gurbir Grewal said the following in an official statement:
"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 [as such]."
Context and Details of the SettlementThe case against Bittrex is rooted in its alleged role as an unregistered broker, exchange, and clearing agency in providing services to U.S. investors in connection with crypto assets. Part of the charges includes an accusation that Bittrex worked closely with token issuers to edit online statements to circumvent federal securities laws.
The settlement, subject to court approval, includes financial components: disgorgement of $14.4 million, prejudgment interest of $4 million, and a civil penalty of $5.6 million, culminating in a total monetary payment of $24 million.
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, noted in his remarks that:
“[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.”
The settlement underscores the broader regulatory landscape and the SEC's vigilant stance against non-compliance in the crypto industry. The outcome serves as a reminder to other crypto exchanges of the necessity to adhere to existing regulations, in a market that continues to draw significant attention from both investors and regulators.
Bittrex's settlement with the SEC, centering on unregistered operationbs as a broker, exchange, and clearing agency, brings further focus to the compliance measures (and, by extension, frameworks designed to adapt specifically for crypto) necessary in the space. The detailed legal agreements and financial components of the settlement highlight the regulatory challenges and ongoing efforts to bring clarity to the industry.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
