US SEC To Sue Bittrex Over Alleged User Violations

Bittrex, the US-based crypto exchange, should brace up for a potential lawsuit from America’s Securities and Exchange Commission (SEC). This comes after Bittrex reportedly started winding down its operations in the United States.

Bittrex Faces Potential Lawsuit

Per reports, the enforcement unit of the SEC has revealed that it is likely to sue Bittrex over alleged violations of rules relating to investor protection. Furthermore, the enforcement division of the SEC has notified Bittrex about the impending legal action since March, as revealed by the crypto exchange’s general counsel, David Maria.

As of then, the crypto trading platform has already started the process of shutting down its US operations, the Bittrex attorney added. According to the SEC’s Wells Notice issued to Bittrex, the regulator noted that the exchange had violated US laws by facilitating transactions as a clearing house and broker-dealer without approval from the commission.

However, Bittrex’s general counsel explained that the firm contacted the SEC late last year to register its business. Bittrex later discovered the only chance of complying with the SEC rules was halting all its revenue-generating operations in the United States.

The Bittrex legal counsel stressed that the crypto exchange’s inability to follow the regulator’s rule was because of the agency’s need for more regulatory clarity regarding cryptocurrency. Attorney Maria explained that the lack of regulatory clarity about the crypto sector in the US results in high operational costs and uncertainty about what product an exchange can or cannot offer.

Maria added that Bittrex is unaware of whether the regulator will continue with its announced lawsuit now that the company is closing shop in the country. The legal counsel noted that if the regulator decides to proceed with the move, Bittrex will file an appeal unless the SEC offers a reasonable settlement plan.

The latest development came after Bittrex announced on March 31 that it was stopping all its operations in the US. Bittrex cited the country’s challenging regulatory and economic space as the main reason for its decision.

It also advised its US-based customers to withdraw their funds before the end of April. It is worth noting that Bittrex had faced several issues in the past before announcing its plans to move out of the United States.

Last year, the company paid over $29 million in fines to another regulator over allegations of sanctions violation by the exchange in several conflict zones between 2014 and 2017.

SEC Chair Faces Political Pushback

Meanwhile, Gary Gensler, the chairman of the US SEC, is reportedly facing mounting pressure from various quarters (especially lawmakers) over his aggressive enforcement action against crypto firms. Accordingly, the latest lawmaker to move against Gensler’s war on cryptocurrency is Congressman Warren Davidson (R-OH).

The lawmaker recently revealed that he was suggesting new legislation to oust the chair of the US securities agency and replace him with a director as the new head. Davidson’s action follows several crackdowns on the digital asset industry by the Gensler-led SEC, a move that crypto advocates called “extrajudicial.”

Hester Peirce, an SEC commissioner, is among the vocal critics of the chair and his method of approach. Industry observers noted that Gensler sees himself as an enforcer in his mission to clean the digital financial space of irregularities and acting as a one-person cop.

At the start of the year, Gensler reportedly vowed to crack down on the entire virtual asset industry by introducing several sweeping actions. Commissioner Peirce, nicknamed “crypto mom,” is a vocal critic of the SEC’s war on cryptocurrency.

Last week, the SEC official released a statement where she aimed a dig at the commission and its chair. Meanwhile, the Ohio representative is among the growing number of politicians in the United States supporting the crypto industry.

In February 2022, Warren proposed a bill to stop any agency from hindering cryptocurrency or transactions via private and personal wallets.

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