SEC Sues Bittrex, Exchange Leaves US – Trustnodes

The Securities and Exchanges Commission (SEC) has sued one of the oldest and biggest crypto exchange Bittrex.

The SEC complaint, filed in the U.S. District Court for the Western District of Washington, claims Bittrex is an unregistered exchange, broker, and clearing agency. SEC said:

“Bittrex and Bittrex Global should have registered as an exchange because they brought together, using a shared order book, the orders for securities of multiple buyers and sellers using established, non-discretionary methods under which such orders interacted, and the buyers and sellers entering such orders agreed to the terms of a trade.

The complaint further alleges that Bittrex should have registered as a clearing agency because it acted as an intermediary in making payments and deliveries upon matching sell and buy orders and maintained custody of customer assets.

Finally, the complaint alleges that Bittrex should have registered as a broker because it regularly engaged in the business of effecting transactions for the accounts of others in crypto assets that were offered and sold as securities.”

A clearing agency is usually a cooperative of banks that keeps accounts of exchanges between banks.

Bittrex used the blockchain, but SEC is trying to throw the book based on the premise that securities were exchanged, brokered, and cleared.

However, the Securities and Exchanges Commission does not yet have even one higher court judgment on whether any crypto at all is a security.

It is its sole decision therefore, as an unelected and unaccountable civil service bureaucracy, that some cryptos are a security and without waiting for that to legally and legitimately be established, it has decided to go after even second order securities aspects, like this exchange.

“Bittrex is beginning the process of winding down its U.S. operations,” said Richie Lai, the co-founder and CEO of Bittrex. “Operating in the U.S. is no longer feasible and I will focus on helping Bittrex Global succeed outside the U.S.”

They could have waited first for a court decision before winding down their operations as SEC has no standing until then, instead of pre-empting, but this is voting with their feet.

This translates to SEC increasing and concentrating the risks for US crypto holders because they’ll have less choices to diversify deposits to avoid things like having all their crypto in blowing up exchanges like FTX, which allegedly had some connections to SEC’s chair Gary Gensler.

They’ll always have defi however as the Biden administration now turns some in the crypto space to wonder whether this is becoming not law but politics.