American crypto exchange Bittrex has agreed to pay a settlement fee of $24 million to the United States Securities and Exchange Commission (SEC) for offering unregistered securities to U.S. investors. Former Bittrex CEO and co-founder William Shihara is also included in the lawsuit.
In April, the exchange declared its plan to shut down its head office in the U.S. over a regulatory clampdown. Later that month, the U.S. SEC sued the digital custodian over allegations that it operated as a securities exchange, broker, and clearinghouse without registering any of these operations with the financial agency.
In May, Bittrex filed for bankruptcy protection for its U.S. and Malta offices. It noted that it had over 100,000 creditors, which it owes between $500 million to $1 billion. The company added that Bittrex Global was unaffected by the business downturn in the affected countries.
Bittrex to Pay $24M Fine
In its press release published on Thursday, the U.S. SEC alleged that Bittrex and Shihara directed customers to “first delete from public channels certain “problematic statements” that Shihara believed would lead a regulator, such as the SEC, to investigate whether the crypto asset was offered and sold as a security.” To these claims, the crypto exchange and its co-founder neither admitted nor denied.
The financial watchdog also charged Bittrex Global for failing to register as a national securities exchange. After consenting to these allegations, the entities involved agreed to pay a penalty fee for disgorgement of $14.4 million, prejudgement interest of $4 million, and a civil penalty of $5.6 million, making $24 million.
U.S. Regulatory Uncertainties
The regulatory framework that defines how digital asset custodians offer cryptocurrencies to U.S. investors continues to be a debate in the crypto community. With the U.S. SEC at the forefront, several crypto exchanges are constrained and are unable to offer as many crypto-related products to U.S. clients as they would have.
Exchanges such as Binance, Coinbase, Kraken, and others have been victims of the agency’s crackdown.
