According to a recent report, cryptocurrency exchange Bittrex received a Wells notice from the US Securities and Exchange Commission (SEC) in March, signaling a potential lawsuit. The SEC’s enforcement division sent the Wells notice before Bittrex decided to wind down its US operations.
“Lack of Regulatory Clarity” in the US Adds Uncertainty to 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 in the form of a Wells notice. A Wells notice is essentially a letter from the US SEC informing a person or company of the regulator’s intention to take enforcement action against them. The notice gives the recipient a chance to respond and often does not result in litigation. In early April, Bittrex informed the public that they “made the difficult decision to discontinue US operations, effective April 30, 2023.”
Bittrex’s general counsel, David Maria, stated that the Wells notice relates to 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, during which time the exchange has received “several subpoenas” from the US securities regulator. Maria revealed that the notice exposed SEC attorneys’ allegations that Bittrex operated as an exchange, broker-dealer and clearinghouse without registering with the SEC.
Bittrex’s general counsel also mentioned that last year the exchange looked into registering with the regulator, but discovered that it would not be feasible. Maria informed the WSJ that the regulations surrounding cryptocurrency in the United States are unclear. “The lack of regulatory clarity results in significant costs and uncertainty about what can and cannot be offered,” the lawyer said. He revealed that the exchange is unsure whether the SEC will pursue legal action. If the securities regulator decides to sue Bittrex, Maria said the exchange would contest the action in court unless the government “presents a reasonable settlement offer.”
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Jamie Redman
Jamie Redman is the news editor at Bitcoin.com News and a financial technology journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open source and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.
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