According to a recent report, cryptocurrency exchange Bittrex received a notice of Wells from the US Securities and Exchange Commission (SEC) in March, indicating a potential lawsuit. The SEC’s enforcement division sent Wells’ notice before Bittrex decided to shut down its US operations.
‘Lack of regulatory clarity’ in the US adds uncertainty for cryptocurrency exchanges
On Sunday, April 16, 2023, the Wall Street Journal (WSJ) reported that cryptocurrency exchange Bittrex was informed of a potential lawsuit and enforcement action in the form of a notice from Wells. A Wells Notice is essentially a letter from the US SEC informing a person or company of the regulator’s intent to take enforcement action against them. The notice gives the recipient an opportunity to respond and often does not result in litigation. In early April, Bittrex informed the public that it “has made the difficult decision to close operations in the US, effective April 30, 2023.”
Bittrex general counsel David Maria stated that Wells’ notice concerns alleged violations of investor protection laws. According to the WSJ report by Dave Michaels and Mengqi Sun, Bittrex has been under investigation by the SEC since 2017, and during this time, the exchange has received “multiple subpoenas” from the US securities regulator. Maria revealed that The notice revealed claims by SEC lawyers that Bittrex was conducting business as an exchange, broker-dealer, and clearinghouse without registering with the SEC.
Bittrex’s general counsel also mentioned that last year, the exchange considered registering with the regulator, but found that it would not be feasible. Maria informed the WSJ that the regulations surrounding cryptocurrencies in the United States are unclear. “The lack of regulatory clarity generates significant costs and uncertainty about what can and cannot be offered,” the lawyer said. He revealed that the exchange is not sure if the SEC will start litigation. If the securities regulator decides to sue Bittrex, Maria said the exchange would challenge the action in court unless the government “made a reasonable settlement offer.”
What do you think the future holds for cryptocurrency regulation in the United States, and how do you think it will affect cryptocurrency exchanges? Share your thoughts in the comments below.
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