The U.S. Securities and Exchange Commission (SEC) has reportedly issued a Wells notice to the cryptocurrency exchange Bittrex, alleging a violation of investor-protection laws. This was followed by the exchange’s decision to terminate its operations in the U.S.
SEC’s Enforcement Division Is Investigating Bittrex for Potential Violations
The Wall Street Journal (WSJ) reported on Sunday, April 16, 2023, that Bittrex was informed of a potential lawsuit and enforcement action against it in the form of a Wells notice back in March. A Wells notice is a letter from the SEC informing an individual or company of the regulator’s intent to take enforcement action against them. It allows the recipient to respond and often does not result in litigation.
At the start of April, Bittrex announced that it was “making the difficult decision to wind down U.S. operations, effective April 30, 2023.” According to Bittrex’s general counsel, David Maria, the Wells notice pertains to alleged violations of investor-protection laws. The WSJ report by Dave Michaels and Mengqi Sun revealed that the SEC’s enforcement division has been investigating the exchange since 2017, and during this time, Bittrex has received “multiple subpoenas” from the U.S. securities regulator.
Maria also disclosed that the notice disclosed SEC attorneys’ claims that Bittrex conducted activities as an exchange, broker-dealer, and clearinghouse without registering with the SEC. Furthermore, the general counsel mentioned that last year, the exchange explored the option of registering with the SEC, but found that it would not be feasible. He noted that the lack of regulatory clarity in the U.S. results in “significant costs and uncertainty” for cryptocurrency exchanges.
Maria revealed that the exchange is uncertain if the SEC will decide to pursue litigation. If the regulator does decide to sue Bittrex, the exchange will contest the action in court unless the government presents a “reasonable settlement offer.”
What do you think the future holds for cryptocurrency regulation in the United States, and how do you believe it will impact crypto exchanges? Share your thoughts in the comments below.
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