WEB3
by BSCN
August 11, 2023
Revealed in a court filing on August 10, the settlement includes fines of $5.6 million and the forfeiture of $18.4 million in alleged gains.
Cryptocurrency exchange Bittrex has agreed to pay a substantial settlement of $24 million to the U.S. Securities and Exchange Commission (SEC) over allegations of failing to register with the regulatory body. The resolution was disclosed through a legal filing in a federal court in Seattle on Thursday.
The SEC's lawsuit, which was filed against Bittrex Inc. and its former CEO William Shihara back in April, asserted that the exchange had been operating as an unregistered national securities exchange, brokerage, and clearing agency. The foreign affiliate of Bittrex, namely Bittrex Global GmbH, was also targeted by the SEC's claims, as it allegedly neglected to register as a national securities exchange while collaborating with Bittrex to manage a single shared order book.
Notably, Bittrex Inc. had filed for bankruptcy in May. Per the terms of the settlement, both Bittrex Inc. and Bittrex Global will be required to pay a fine of $5.6 million, in addition to forfeiting $18.4 million in alleged unlawful gains. This payment is slated to take place within 60 days after the submission of a liquidation plan as part of the ongoing bankruptcy proceedings.
As part of the agreement, the companies and William Shihara are also subject to an injunction that prohibits them from violating U.S. securities laws moving forward. It's worth mentioning that the parties involved did not admit to the SEC's allegations.
A representative from Bittrex expressed the company's contentment with the resolution, stating that they were "pleased" to have reached a settlement. However, the firm plans to provide further comments post the court's approval of the arrangement. Notably, Bittrex had previously denied allegations of securities trading on its platform, and Bittrex Global had emphasized that it lacked U.S. clientele.
The SEC's lawsuit further contended that William Shihara had collaborated with crypto asset issuers aiming to list their tokens for trading on the Bittrex platform. Allegedly, Shihara had taken steps to remove public statements that he believed could attract regulatory scrutiny, potentially categorizing those token offerings as securities.
Gurbir Grewal, the SEC's Enforcement Director, emphasized that the settlement underscores the principle that evading liability through semantic changes or adjustments in descriptions holds no ground. He stated that the true determinant is the economic substance of these offerings.
In response, Shihara expressed contentment with the settlement, deeming it a favorable outcome. He stressed the importance of finding a balance between nurturing innovation and safeguarding consumers' interests. Shihara stated, "I hope today’s proposed settlement helps move that forward."
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