Bittrex, the cryptocurrency exchange, has agreed to pay a sum of $24 million in order to resolve allegations put forth by the U.S. Securities and Exchange Commission (SEC) that it neglected to register with the regulatory agency.
This development was revealed through a submission made in a Seattle federal court on Thursday.
In April, the SEC initiated legal action against Bittrex Inc, as well as its former CEO William Shihara, asserting that they were involved in the operation of an unregistered national securities exchange, brokerage, and clearing agency.
Furthermore, the SEC contended that Bittrex’s overseas affiliate, Bittrex Global GmbH, failed to undergo registration as a national securities exchange in relation to its joint management of a single shared order book alongside Bittrex.
Following this legal confrontation, Bittrex Inc proceeded to file for bankruptcy in May.
The terms of the agreement necessitate that both Bittrex Inc and Bittrex Global adhere to a $5.6 million fine and surrender an amount of $18.4 million in alleged unlawful profits, a move scheduled to take place 60 days following the submission of a liquidation plan as part of the bankruptcy case.
As part of the settlement, the involved entities, as well as William Shihara, have agreed to a court order that mandates compliance with U.S. securities laws, thereby refraining from violations in the future. However, they have not admitted to the SEC’s assertions.
A spokesperson from Bittrex expressed satisfaction over reaching this settlement and indicated that further details will be shared once the court approves the resolution. Notably, Bittrex had earlier denied any occurrence of securities trading on its platform.
Bittrex Global, for its part, has clarified that it does not serve customers within the United States.
The lawsuit brought by the SEC alleged that William Shihara collaborated with issuers of crypto assets who intended to make their tokens available for trading on Bittrex’s platform.
Shihara’s alleged actions included removing public statements that he believed might attract regulatory scrutiny to these token offerings as potential securities.
The SEC’s Enforcement Director, Gurbir Grewal, emphasized that this settlement underscores the notion that evading accountability by merely altering labels or descriptions is insufficient, as the true essence of these offerings lies in their economic reality.
William Shihara, in response to the settlement, characterized it as a positive outcome. He stressed the importance of striking a balance between promoting innovation and entrepreneurship while also safeguarding consumer interests. Shihara expressed his hopes that the settlement would contribute to advancing this equilibrium.