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Bittrex Crypto Exchange Settles SEC Lawsuit with $24 Million Fine

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A few months after being sued for allegedly defying the Securities and Exchanges Commissions rules by offering services to US clients without registration, the bankrupt crypto trading platform has chosen to settle the lawsuit by paying a $24 million fine.

Bittrex Settles With SEC Over Unregistered Services Row

Earlier in April, one month before Bittrex filed for bankruptcy, the US SEC filed a lawsuit against the crypto exchange claiming that it had operated as a securities exchange, broker, and clearinghouse from 2017 to 2022 without registering as any of these things with the commission and during the stated period, the SEC noted that the trading platform had generated at least $1.3 billion in revenue.

Additionally, Bittrex was accused of instructing crypto issuers to delete any statements they made or posted publicly that could suggest their tokens violate securities law.

“For years, Bittrex worked with token issuers to ‘scrub’ their online statements of any indicia that they were investment contracts—all to evade the federal securities laws. They failed,” said Gurbir S. Grewal, the SEC’s Division of Enforcement director.

The lawsuit also included the exchange’s co-founder William Shihara and its global affiliate Bittrex Global GmbH, who were accused of failing to register their operations.

According to the court document filed on Thursday, neither Bittrex nor Shihara will acknowledge or reject the accusations as part of the settlement agreement. Moreover, the trading platform is prohibited from making any public remarks that would imply the SEC’s charges lacked any foundation for its allegations.

Shihara, who was not required to pay the fine, termed the settlement proposal “a good outcome,” adding that he hoped it would benefit the US in striking a balance between safeguarding investors and fostering innovation.

The $24 million settlement OK included $14.4 million for disgorgement, $4 million in prejudgment interest, and $5.6 million in civil money penalties. The SEC posted a tweet confirming the payment of the acceptable amount.

In the statement, Grewal stated that Bittrex has been breaking federal securities laws for years. He complained about the negative results of breaking the law, saying, “Today’s settlement makes clear that you cannot escape liability by simply changing labels or altering descriptions because what matters is the economic realities of those offerings.”

“I am grateful to the SEC staff for aggressively pursuing non-compliance in the crypto industry, resolving this matter, and bringing additional relief to harmed investors,” he added.

SEC Under Fire For the Bittrex Settlement

While the SEC celebrated its win, John E Deaton, a pro-XRP lawyer and founder of the crypto regulatory news platform CryptoLaw, took to Twitter, recently rebranded to X, to criticize the regulator.

He condemned the SEC for celebrating the payment of the fine, yet it had done nothing to regulate the crypto space. Deaton asked the SEC what investors it had protected by asking Bittrex to pay this fine.

He further asked Grewal to confirm that the SEC’s Ethics Office had reviewed and authorized the speech delivered by the former SEC director William Hinman, in which he claimed that Ether should not be considered a security.

Lastly, he challenged Grewal to a meeting with him to address specific questions if he believed he was a civil servant with nothing to hide.

The SEC has been known for having legal issues with crypto exchanges operating in the US. Bittrex is one of the smaller exchanges caught in the crossfire several times. Last year, the bankrupt deal agreed to a fine of $29 million to settle enforcement cases with US authorities.

At the time, Bittrex had been accused of violating sanctions against countries including Iran, Cuba, and Syria.

Despite ceasing operations and filing for bankruptcy in the US, the exchange continues to offer services to other countries outside the US through Bittrex Global.

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