- SEC accuses Bittrex of offering unregistered securities, including OMG, DASH, and ALGO.
- Bittrex’s failure to register as a broker-dealer, national securities exchange, or clearing agency puts investors at “significant risk.”.
The US Securities and Exchange Commission (SEC) has accused Bittrex of making numerous crypto assets available for trading without registration, including OmiseGO (OMG), Dash (DASH), Algorand (ALGO), TokenCard (TKN), NAGA Coin (NGC), and i-House Token (IHT), among others.
In a court complaint filed against Bittrex, the SEC highlights the platform’s recognition of certain tokens, like Decentraland (MANA), possessing characteristics of securities, but still approving them for trading. The SEC alleges that Bittrex has failed to register as a broker-dealer, national securities exchange, or clearing agency, and has earned at least $1.3 billion in revenues from transaction fees, putting investors at “significant risk.”
Bittrex’s Defiance of Regulatory Structures and Evasion of Disclosure Requirements
Since 2014, Bittrex has operated its trading platform, allowing US customers to buy, sell, and trade crypto assets, including securities. The platform has merged the functions of broker-dealers, exchanges, and clearing agencies, which are typically separated in traditional securities markets.
Bittrex’s defiance of regulatory structures and evasion of disclosure requirements have jeopardized investor protection and the stability of national securities markets. The SEC alleges that Bittrex has been operating as an unregistered broker, soliciting potential investors, handling customer funds and assets, and charging fees for these services.
Additionally, Bittrex is accused of acting as an unregistered clearing agency by holding customer assets in Bittrex-controlled wallets and settling transactions through debiting and crediting relevant customer accounts. The complaint also states that Bittrex and its foreign affiliate Bittrex Global have operated the platform as an unregistered exchange, providing a marketplace for buyers and sellers of crypto assets, and executing their orders.
Bittrex’s Trading Platform Puts Investors at Significant Risk
Bittrex’s trading platform does not restrict crypto asset purchases to any particular investor type, nor does it require investors to purchase quantities tied to any non-investment use of the asset. Furthermore, assets available for sale on the platform are transferable and immediately eligible for resale without apparent restrictions.
The SEC alleges that Bittrex’s failure to register puts investors at significant risk since it ignores clear indications that some assets were marketed, offered, and sold as securities, such as in the case of Power Ledger (POWR).
