US-based digital asset exchange, Bittrex, is now facing potential regulatory action from the Securities and Exchange Commission. According to the report, the agency’s action aims to determine if the exchange violated any investor protection laws.
The general counsel disclosed that Bittrex had started winding down its operations before the SEC sent a potential enforcement notice.
Bittrex Faces Action From SEC
A recent report revealed that the SEC is investigating whether Bittrex has violated securities laws by allowing the trading of unregistered securities on its platform.
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The SEC clarified in a Wells notice that the company had defaulted US laws by carrying out its business as a broker-dealer, clearinghouse, and exchange without an official registration with the agency.
Notably, the company’s general counsel, David Maria, revealed that Bittrex had already talked with the agency about registering its operations. But the firm later realized that it was impossible to meet the requirements of the SEC without ending its revenue-producing operations in the country.
According to Maria, one of the issues Bittrex had regarding compliance with the SEC’s rules was that the agency didn’t clarify its regulations.
As such, the exchange concluded that it would wind down its services in the United States in response to the enforcement notice in March. In the meantime, the executives could not tell whether or not the SEC will file a lawsuit since the company is already preparing to shut down local operations.
Maria also noted that if the agency forges ahead with the action, the exchange will take the case to the law. However, such a move won’t be needed if the agency decides to go with a reasonable settlement offer.
Bittrex, founded in 2014 and based in Seattle, Washington, is one of the largest cryptocurrency exchanges in the United States.
The SEC Regulatory Stance On Crypto Firms
The SEC has long been displaying strict actions toward crypto firms regarding the sales of digital tokens without registering them as securities. This is particularly true for trading platforms, brokers, and exchanges.
The agency has emphasized that crypto firms must ensure that their trading platforms and other services do not violate any securities laws. This stance is in response to the concerns about the risks associated with using digital currencies, including potential fraud, market manipulation, and money laundering.
As the industry evolves and matures, more exploitation of investors’ funds might likely follow. As such, regulators aim to ensure that crypto users trade digital assets in a safe and regulatory-compliant manner.
Featured image from Pixabay and chart from Tradingview
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Author: Eli Dambell
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