Bittrex, a US crypto exchange is facing potential legal action from SEC.
The US cryptocurrency exchange is putting its operations on hold after receiving a legal action notice from the SEC.
Although, the Seattle-based company was preparing to shut down its local operations, According to the Wall Street Journal, Bittrex was charged with an alleged violation of investor-protection laws.
Wall Street further disclosed that Bittrex was in business with exchanges, broker-dealers and clearinghouses without proper regulatory registration.
Although, the SEC and Bittrex discussed how to register their business in late 2022, according to Bittrex’s general counsel, David Maria. The cryptocurrency company discovered there was no way to abide by the SEC’s regulations without essentially ending all of its revenue-generating operations in the nation.
Maria also said stressed that Bittrex’s inability to abide by SEC requirements was caused by the agency’s initial failure to establish clear regulations for cryptocurrencies.
He said:
“The lack of regulatory clarity here results in substantial costs and no certainty as to what can and can’t be offered.”
At the time of writing, Bittrex is still not sure if the SEC will file a lawsuit now that the company is shutting down its operation in the United States.
On the other hand, Maria stressed that this could be devastating to the company either way if the agency slaps the crypto company with a lawsuit. According to him, Bittrex will litigate unless regulators “come with a fair settlement offer.”
This news is coming as a shock to Bittrex after announcing plans to stop operations in March 31. The company blames the challenging regulatory and economic environment for its plight and advised U.S. customers to withdraw their funds by April 30, 2023.
The Co-founder and CEO Richie Laie said:
“Regulatory standards are becoming unclear and enforced, without appropriate discussion or input, creating an unlevel playing field for competitors.”
The CEO further disclosed that they have decided to focus on helping Bittrex Global succeed outside the United States.
Bittrex had various problems at home before deciding to leave the country. Bittrex agreed to pay more than $29 million in fines from the Office of Foreign Assets Control and Financial Crimes Enforcement Network of the U.S. Department of the Treasury in 2022. The settlement concerned sanctions violations that occurred between 2014 and 2017 in the Crimean Peninsula, Cuba, Iran, Sudan, and Syria.
The closing of Bittrex’s U.S. operations serves as a reminder of the difficulties encountered by cryptocurrency businesses attempting to operate in an ambiguous regulatory landscape. However, this puts the U.S at risk of missing out as an attractive hud for evolving blockchain and crypto innovation should companies continue to collapse or move operations out of the country.
There is need for United States to review their regulation strategies so as to accommodate a favorable environment.
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