The United States Securities and Exchange Commission (SEC) has announced an agreement with crypto trading platform Bittrex and co-founder and former CEO William Shihara for operating an unregistered exchange.

In an Aug. 10 notice, the SEC said Bittrex and Bittrex Global agreed to pay $14.4 million in disgorgement, $4 million in prejudgment interest, and $5.6 million in civil penalties to settle the legal dispute with the federal regulator. The agreement is still subject to court approval.

“For years, Bittrex worked with token issuers to ‘scrub’ their online statements of any indicia that they were investment contracts — all in an effort to evade the federal securities laws,” said SEC enforcement director Gurbir Grewal. “Today’s settlement makes clear that you cannot escape liability by simply changing labels or altering descriptions because what matters is the economic realities of those offerings.”

Today we announced that crypto asset trading platform Bittrex Inc. and its co-founder and former CEO, William Shihara, agreed to settle charges that they operated an unregistered national securities exchange, broker, and clearing agency.

— U.S. Securities and Exchange Commission (@SECGov) August 10, 2023

In a statement provided to Cointelegraph, Shihara called the settlement a “good outcome”, adding the United States needed to “[strike] a balance between fostering innovation, encouraging entrepreneurs and the need to protect consumers”. Shihara was the CEO of Bittrex from its founding in 2014 to his departure in 2019.

The SEC’s complaint filed in April claimed Bittrex and Shihara operated an unregistered national securities exchange, broker, and clearing agency. The financial regulator also filed a separate enforcement action against Bittrex Global for “its operation of a single shared order book along with Bittrex”.

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Author: Turner Wright

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