- Settlement Details: Bittrex and Shihara to pay $24M, including fine and interest.
- Allegations: SEC claimed Bittrex acted as unregistered broker and exchange.
- Ripple’s Influence: SEC challenges Ripple’s XRP classification in ongoing cases.
Cryptocurrency exchange Bittrex and its former CEO William Shihara have come to an agreement to settle charges brought against them by the United States Securities and Exchange Commission (SEC). The SEC accused Bittrex of operating as an unregistered exchange.
Bittrex and Bittrex Global have consented to pay a total of $24 million, encompassing the return of $14.4 million in earnings, an additional $4 million in interest, and a fine of $5.6 million.
The SEC’s allegations against Bittrex centered on claims that the exchange functioned as an unregistered broker, exchange, and clearing agency, offering and selling securities without the necessary registration as a national securities exchange. Moreover, the company and Shihara were accused of instructing crypto asset issuers to remove certain statements online, especially those that might attract the SEC’s attention, before the assets were available for trading on the exchange.
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, emphasized that the promotional tactics of a crypto asset do not determine its security classification, stating, “Today’s settlement makes clear that you cannot escape liability by simply changing labels or altering descriptions because what matters is the economic realities of those offerings.”
Although Bittrex and Shihara have settled with the SEC, they neither admit nor deny the allegations made by the SEC. Pending court approval, they will be permanently prohibited from violating certain securities laws.
The SEC originally filed the complaint against Bittrex on April 17, shortly after the exchange announced the discontinuation of its US operations on March 31. Bittrex US suspended operations on April 30 and subsequently filed for Chapter 11 bankruptcy on May 8, which does not affect Bittrex Global’s ongoing operations.
This development comes amid the SEC’s determination to challenge Ripple’s recent partial legal victory on the classification of XRP. The SEC’s ongoing litigation includes cases against crypto exchanges Binance and Coinbase.
In its attempts to dismiss the case against the SEC, Coinbase has referenced the Ripple ruling multiple times.