(Image credits: Forbes)
In a significant development, Bittrex, a cryptocurrency exchange headquartered in Seattle, has reached a settlement agreement with the United States Securities and Exchange Commission (SEC), putting an end to a legal battle that has been ongoing since April. The regulatory agency announced the resolution on Thursday, revealing that Bittrex will pay a total of $24 million to settle the case.
The SEC’s investigation and subsequent lawsuit revolved around allegations that Bittrex, under the leadership of its former CEO William Shihara, failed to comply with regulatory requirements. Specifically, the exchange was accused of not registering as a broker-dealer, exchange, or clearing agency, which are mandatory under federal securities laws. The agency claimed that Bittrex amassed approximately $1.3 billion in unlawful revenue between 2017 and 2022.
Under the terms of the settlement, Bittrex has agreed to make payments as follows: $14.4 million in disgorgement, $4 million in prejudgment interest, and a civil penalty amounting to $5.6 million. This joint and several payment structure signifies the exchange’s commitment to resolving the matter.
Gurbir S. Grewal, the director of the SEC’s Division of Enforcement, criticized Bittrex’s attempts to sidestep federal securities laws, 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. They failed.”
In a notable aspect of the settlement, Bittrex neither admitted nor denied the allegations brought forth by the SEC. This common legal practice allows the exchange to conclude the case without formally accepting guilt.
Bittrex, while being a relatively smaller player in the U.S. cryptocurrency exchange landscape, has faced its share of regulatory challenges. In 2022, the exchange agreed to pay $29 million to settle enforcement cases related to alleged violations of sanctions against countries including Iran, Cuba, and Syria. This recent settlement with the SEC marks another chapter in the exchange’s efforts to navigate the complex regulatory environment surrounding the cryptocurrency industry.