Report Reveals That US Crypto Exchange Bittrex May Face Potential Action from SEC

Bittrex SEC Investigation

According to Bittrex’s general counsel, the United States-based cryptocurrency exchange had already initiated the process of winding down its U.S. operations when it received a notice of potential action from the U.S. Securities and Exchange Commission (SEC). 

The enforcement division of the SEC is reportedly considering recommending that the agency sues Bittrex over alleged violations related to investor protection.

The SEC’s notice of potential enforcement action, known as a Wells notice, accused Bittrex of violating laws by operating as an exchange, broker-dealer, and clearinghouse without registering with the regulator. Bittrex had discussed how to register its operations with the SEC in late 2022, but the company found that it would be unable to follow the regulator’s rules without essentially ceasing all of its revenue-producing activities in the country.

However, Attorney Maria maintained that Bittrex couldn’t comply with the SEC laws because the agency did not provide clear regulations for crypto in the first place, saying:

The lack of regulatory clarity here results in substantial costs and no certainty as to what can and can’t be offered.”

Bittrex announced plans to halt all operations in the United States by March 31, citing the challenging regulatory and economic environment. 

Despite this decision, the SEC may still decide to file a lawsuit against the exchange. If this occurs, Bittrex will litigate unless regulators come up with a reasonable settlement offer.

The news of the potential action from the SEC came after Bittrex agreed to pay more than $29 million in fines to the U.S. Department of the Treasury’s Office of Foreign Assets Control and Financial Crimes Enforcement Network in 2022. The settlement was related to sanctions violations in the Crimea region, Cuba, Iran, Sudan, and Syria between 2014 and 2017.

Nonetheless, it remains to be seen whether the SEC will file a lawsuit against the exchange, and Bittrex has expressed its willingness to litigate if regulators do not offer a reasonable settlement.