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The U.S. Securities and Exchange Commission (SEC) has accused Bittrex, a cryptocurrency exchange, of violating federal laws by running a national securities exchange, broker, and clearing agency simultaneously. The exchange's former CEO, Bill Shihara, and Bittrex Global GmbH are both implicated in the charges.

According to a press release from the regulator published on Monday, Bittrex collaborated with crypto issuers to remove "problematic statements" that could potentially draw the attention of the SEC, such as price predictions and statements that suggest an "expectation of profit." Additionally, the SEC alleges that Bittrex should have registered as an exchange, clearing agency, and broker, as it offered services similar to all three types of entities.

SEC Enforcement Director Gurbir Grewal said the lawsuit against Bittrex "should send a message to other non-compliant crypto market intermediaries."

"As laid out in our complaint, Bittrex’s business model was based on three things: circumventing the registration requirements of the federal securities laws; counseling issuers of crypto asset securities to do the same by altering their offering materials; and combining multiple market intermediary functions under one roof to maximize profits," he said.

Bittrex announced last month it planned to exit the U.S. by the end of April, citing "the current U.S. regulatory and economic environment." This past weekend, the company shared more information, when general counsel David Maria told the Wall Street Journal that the company had received a Wells Notice – a statement that the SEC's Enforcement Division found evidence of legal violations – in March. Maria told the Journal that Bittrex would fight the suit unless the SEC provided a "reasonable settlement offer."

The SEC's lawsuit against Bittrex bears resemblance to a recent case involving Beaxy, which settled on comparable charges. This legal action could also serve as an indication of potential charges against Coinbase (COIN), the largest exchange in the United States, which received a Wells Notice from the SEC last month.

The SEC's complaint claims that six cryptocurrencies - OmiseGO (OMG), Algorand (ALGO), Dash (DASH), TokenCard (TKN), i-House Token (IHT), and NAGA (NGC) - should be classified as securities. Following the announcement, the value of Algorand's token experienced a 2.5% decline during intraday trading, while 24-hour volume spiked.

Source Coindesk