By the time Bittrex received notice of potential action from the SEC, it had already begun to wind down operations, according to the general counsel.
Even though it is making preparations for shutting down its local operations, the cryptocurrency exchange Bittrex, which is based in the United States, is apparently on the radar of the United States securities commission and could be subject to action.
According to a Wall Street Journal article published on April 16, the enforcement section of the U.S. Securities and Exchange Commission (SEC) is heading toward recommending that the agency sue Bittrex for suspected investor protection violations.
According to Bittrex general counsel David Maria, the enforcement unit warned Bittrex about probable SEC action in March. According to the attorney, the Seattle-based cryptocurrency company had already begun the process of closing down its U.S. operations by that point.
The SEC stated in the notice of prospective enforcement action, or “Wells notice,” that Bittrex violated the law by operating as an exchange, broker-dealer, and clearinghouse without initially registering with the regulator.
The company explored how to register its operations with the SEC in late 2022, according to Bittrex’s general counsel. The cryptocurrency company discovered that there was no way to abide by the SEC’s regulations without essentially ending all of its revenue-generating operations in the nation.
Attorney Maria emphasized that Bittrex’s inability to adhere to SEC standards was caused by the agency’s initial failure to establish clear regulations for cryptocurrencies. He declared:
“Here, regulatory uncertainty leads to significant costs and a lack of certainty as to what can and cannot be offered,”
Following the company’s decision to discontinue operations in the US, Maria claimed that Bittrex is unsure whether the SEC will bring a lawsuit. In the event that the government decided to act, Bittrex will go to court unless the regulators “came with a reasonable settlement offer,” according to the attorney.
The information was released shortly after Bittrex announced that all operations would be suspended in the United States on March 31 due to challenging regulatory and economic circumstances. Customers in the US had been advised by the exchange to withdraw their funds by April 30, 2023.
Bittrex experienced issues at home before it made the decision to leave the United States. Bittrex agreed to pay more than $29 million in fines from the Office of Foreign Assets Control and Financial Crimes Enforcement Network of the U.S. Department of the Treasury in 2022. The settlement was associated with sanctions violations that occurred between 2014 and 2017 in the Crimean Peninsula, Cuba, Iran, Sudan, and Syria.