Securities and Exchange Commission Charges Crypto Platform Bittrex and Co-Founder William Shihara

Today, the Securities and Exchange Commission (SEC) charged crypto asset trading platform, Bittrex, Inc., and its co-founder and former CEO, William Shihara, for operating an unregistered national securities exchange, broker, and clearing agency. The SEC also charged Bittrex Global GmbH, the foreign affiliate of Bittrex, for failing to register as a national securities exchange in connection with its operation of a single shared order book with Bittrex.

Since 2014, Bittrex has held itself out as a platform that facilitates buying and selling of crypto assets, which the SEC’s complaint alleges were offered and sold as securities. From 2017 to 2022, Bittrex earned at least $1.3 billion in revenues, including from U.S. investors, while not registering any of these activities with the Commission.

The complaint further alleges that Bittrex and Shihara, who was the company’s CEO from 2014 to 2019, coordinated with issuers to delete “problematic statements” from public channels that would lead to an SEC investigation. For example, to avoid regulatory scrutiny, Bittrex and Shihara instructed issuers to delete statements related to “price predictions” and “expectation of profit” before making an asset available on the platform.

SEC Chair Gary Gensler stated, “Today’s action, yet again, makes plain that the crypto markets suffer from a lack of regulatory compliance, not a lack of regulatory clarity.” SEC Director of the Division of Enforcement, Gurbir S. Grewal, commented, “We allege that Bittrex repeatedly chose profits over investor protection.”

The SEC’s complaint, filed in the U.S. District Court for the Western District of Washington, alleges that Bittrex and Bittrex Global should have registered as an exchange due to the shared order book and the agreement by buyers and sellers entering orders. The complaint further alleges that Bittrex should have registered as a clearing agency and as a broker due to its involvement in payments, deliveries, custody of customer assets, and effecting transactions for the accounts of others in crypto assets.

Today, Bittrex announced the winding down of its U.S. operations, citing a lack of economic viability in the current regulatory and economic environment. All customer funds are safe and available to withdraw.

TL;DR:

Today, the Securities and Exchange Commission charged crypto asset trading platform, Bittrex, Inc., and its co-founder and former CEO, William Shihara, for operating an unregistered national securities exchange, broker, and clearing agency. Bittrex also announced the winding down of its U.S. operations, citing a lack of economic viability in the current regulatory and economic environment. All customer funds are safe and available to withdraw.