SEC Fights to Keep $24M From Crypto Exchange Bittrex After Policy U-Turn

Bankrupt cryptocurrency exchange Bittrex is locked in a legal fight to recover $24 million it paid to the U.S. Securities and Exchange Commission (@SECGov) in 2023, arguing that the regulator's sweeping reversal on crypto enforcement has made its penalty impossible to justify.

The Case for Vacating the Settlement

Bittrex has asked a federal court in Seattle to vacate its 2023 settlement with the SEC and order the agency to return the $24 million it paid in penalties, citing the regulator's broad shift in approach to digital assets. The filing argues that the regulator no longer supports the legal theory used to pursue the case, after repeatedly stating under President Donald Trump's administration that most crypto tokens do not qualify as securities.

In April 2023, Bittrex and its former CEO, William Shihara, agreed to pay $24 million to settle SEC allegations that the platform had operated as an unregistered national securities exchange, broker, and clearing agency. The company paid $24 million comprising $14.4 million in alleged profits and interest plus a penalty, and neither admitted nor denied the charges. Soon after the settlement, Bittrex announced it was shutting down its U.S. operations, saying the regulatory and economic environment made it impossible to keep going profitably.

The motion states that the SEC has already dropped nearly all comparable enforcement actions and investigations involving crypto exchanges and token issuers. The SEC dropped its enforcement case against Coinbase, further distancing itself from a previous stance that held the vast majority of crypto tokens were securities requiring registration. The regulator also filed to withdraw its case against Coinbase, pause its cases against Binance and Tron, and informed ConsenSys, OpenSea, Robinhood, Uniswap, and Gemini it would close its cases or investigations into those platforms.

The SEC Pushes Back, and the Stakes Are Broader

In response to Bittrex's motion, @SECGov filed its own brief arguing that Bittrex has not demonstrated that sufficient legal grounds exist to undo a final judgment, and that prohibitions on future securities violations remain in force. Legal observers have noted that courts are typically reluctant to undo settled agreements, even when an agency's policy direction shifts under new leadership.

The motion also comes after the SEC moved to forfeit Bittrex's $24 million to the U.S. Treasury Department for distribution to former customers identified as having suffered financial harm, though that effort has stalled because the agency was unable to identify enough qualifying customers.

The implications stretch well beyond Bittrex itself. A favorable ruling would not only return the $24 million but also open a path for other firms punished under the old regime to seek refunds. The case sets a high-stakes test for other firms punished under the previous regime. If successful, it could unlock capital for companies that settled under the old, more aggressive enforcement strategy. The outcome will signal whether past penalties remain final despite a fundamental change in regulatory direction.

Sources:
Decrypt: Bittrex Wants Its $24 Million Settlement Back
CoinDesk: Coinbase Case Dropped by U.S. SEC as Agency Reverses Crypto Stance
Crypto News: Bittrex Asks Court to Void $24M SEC Settlement