Cryptocurrency exchange Bittrex is reportedly facing potential action from the U.S. securities regulator despite its plans to cease local operations in the country.
The enforcement division of the U.S. Securities and Exchange Commission (SEC) is inclined to recommend the agency sue Bittrex for alleged investor protection violations, according to an April 16 report by The Wall Street Journal.
The enforcement unit informed Bittrex of prospective SEC action in March, according to Bittrex’s general counsel David Maria. The attorney stated that the Seattle-based crypto company had already begun winding down its U.S. operations by then.
Bittrex violated the law by operating as an exchange, broker-dealer, and clearinghouse without registering with the regulator, as stated in the SEC’s Wells Notice.
According to Bittrex’s general counsel, the company discussed how to register its operations with the SEC in late 2022. The crypto company determined it could not comply with SEC regulations without ceasing its revenue-generating activities in the country.
Attorney Maria emphasized that Bittrex’s inability to comply with SEC regulations was due to the agency’s lack of specific crypto regulations. He declared:
“The lack of regulatory clarity here results in substantial costs and no certainty as to what can and can’t be offered.”
Maria stated that Bittrex is unaware if the SEC will file a lawsuit now that the company is ceasing operations in the United States. If the agency decides to take action, Bittrex will sue unless regulators make a “reasonable settlement offer,” according to the attorney.
The announcement came shortly after Bittrex stated that it would cease all operations in the United States on March 31, citing the challenging regulatory and economic climate. The exchange instructed American clients to withdraw their funds by April 30, 2023.
Before deciding to depart the United States, Bittrex had encountered several difficulties at home. Bittrex agreed to pay more than $29 million in penalties to the Office of Foreign Assets Control and Financial Crimes Enforcement Network of the U.S. Department of the Treasury in 2022. The resolution related to sanctions violations committed between 2014 and 2017 in Crimea, Cuba, Iran, Sudan, and Syria.
