Key Takeaways
- Bittrex is given a 90-day window after the implementation of its liquidation plan to fulfill its financial obligations to the SEC.
- The SEC’s original complaint, filed in April, had accused Bittrex and Shihara of operating an unregistered national securities exchange, broker, and clearing agency.
- Bittrex Global will collectively pay $14.4 million in disgorgement, $4 million in prejudgment interest, and $5.6 million in civil penalties.
The United States Securities and Exchange Commission (SEC) has recently announced an agreement with cryptocurrency trading platform Bittrex and its co-founder and former CEO, William Shihara, over allegations of operating an unregistered exchange.
The regulatory authority disclosed that Bittrex and its international counterpart, Bittrex Global, will collectively pay $14.4 million in disgorgement, $4 million in prejudgment interest, and $5.6 million in civil penalties to resolve the legal dispute.
According to the SEC’s statement released on August 10, this settlement marks the end of the investigation into the platform’s activities. Bittrex is given a 90-day window after the implementation of its liquidation plan to fulfill its financial obligations to the SEC. However, should Bittrex fail to make the required payments by March 1 of the following year, the regulatory body retains the right to seek court intervention.
SEC enforcement director Gurbir Grewal criticized Bittrex’s practices, stating, “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.”
The SEC’s original complaint, filed in April, had accused Bittrex and Shihara of operating an unregistered national securities exchange, broker, and clearing agency.
The SEC also underscored that Bittrex’s foreign affiliate, Bittrex Global GmbH, failed to register as a national securities exchange while operating a single shared order book alongside Bittrex.
The Seattle-based firm had previously denied facilitating securities trading on its platform, emphasizing that it had no U.S. customers. However, the SEC’s complaint suggested that Bittrex and Shihara, who was the CEO of the company from 2014 to 2019, instructed issuers seeking to list their crypto assets on the platform to remove specific statements from public channels. Shihara believed these statements could trigger regulatory scrutiny, such as an investigation by the SEC, into whether the crypto assets qualified as securities.
Bittrex filed for Chapter 11 bankruptcy in May. As per court filings, the exchange had over 100,000 creditors, between $500 million and $1 billion in assets and liabilities as part of bankruptcy proceedings.
