Key points
- Bittrex exchange, its co-founder accused of playing a hide-and-seek game with the US Federal laws
- Bittrex made $1.3 million in revenues from unregistered securities
It appears like the Bittrex crypto exchange, alongside its executives has been caught with their ‘crypto-pants’ down after getting slammed with a lawsuit over violation of the US securities laws by the US financial regulators, a new filing revealed on Monday, will they be able to ‘coin-vince’ with a good defense?
According to SEC, the exchange, and its co-founder William Shihara have been charged for playing a ‘hide and seek’ game with federal securities laws by operating a national securities exchange, broker, and clearing agency which is not registered with the federal agency, further to this, Bittrex, Inc.’s foreign affiliate, Bittrex Global GmbH was also accused of failing to register as a national securities exchange in connection with its operation of a “single shared order book along with Bittrex.”
Bittrex has been operating as a platform that allows buying and selling of virtual assets since 2014 which are securities, within 5 years (2017-2022), roughly $1.3 has been made by Bittrex in revenues from transaction fees from investors while servicing them as a broker, exchange, and clearing agency of which any of these were not registered with appropriate commission in the US.
Also, Shihara, a former CEO and co-founder of the exchange collaborated with issuers who offered their crypto assets via the platform to first delete from public channels certain “problematic statements” that the former CEO thought may lead to issues with the financial watchdog, for instance, between 2014 and 2019, Bittrex exchange alongside its co-founder Shihara told applicants who wanted to issue crypto assets for trading on the platform to delete statements related to “price predictions,” “expectation of profit,” and other “investment related terms.”
“As alleged in our complaint, Bittrex and issuers that it worked with knew the rules that applied to them but went to great lengths to evade them by directing issuer-applicants to ‘scrub‘ offering materials of information indicating that certain crypto assets were securities. Further, Bittrex, as alleged, failed to register and comply with U.S. securities laws as an exchange, broker-dealer, and clearing agency, SEC chair Gary Gensler said, while commenting on the lawsuit.
With the look of things, it appears like Bittex, alongside its co-founder may need to enroll in a crash course ‘Regulatory 101’ if they want to win their case against SEC, hopefully, they don’t end up in the ‘detention block-chain’, henceforth, they will need to put on their regulatory thinking caps and prove SEC otherwise.
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