On April 17, 2023, the SEC filed its complaint with the US District Court for the Western District of Washington. The lawsuit alleged that from 2014 to 2019, Bittrex provided unregistered services to American investors involving crypto assets considered to be securities.
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Furthermore, the CEO reportedly urged asset issuers to eliminate "problematic statements" from their public channels in an effort to avoid SEC scrutiny regarding the classification of cryptocurrencies as securities.
On August 11, the SEC announced that Bittrex had consented to pay $24 million to resolve the complaint.
As part of the resolution, Bittrex Global GmbH, a subsidiary of Bittrex Inc., admitted that it had neglected to register as a national securities exchange. However, neither acknowledged nor denied the allegations were made by the defendants.
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The chief of the SEC's enforcement division, Gurbir S. Grewal, commented on the settlement. He noted Bittrex's efforts to alter the public statements of token issuers in order to circumvent federal securities regulations. He emphasized that altering labels or descriptions does not absolve parties of legal liability.
Bittrex insolvency
Bittrex's March announcement that it would cease U.S. operations caused a surge in withdrawal requests. This culminated on May 8, when the cryptocurrency exchange declared insolvency and disclosed $300 million in client cash and bitcoin holdings as of May 10.
After the U.S. government opposed Bittrex's efforts to enable consumers access to their assets due to unpaid sanctions-related penalties, on June 13 a Delaware bankruptcy court ruled that the exchange could facilitate withdrawals for uncontested claims.
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However, the judgment did not definitively determine ownership of the assets, opening the door to potential future legal complications.
