Bittrex, a cryptocurrency exchange, has submitted a request to have a lawsuit brought against them by the United States Securities and Exchange Commission (SEC) dismissed. In their defense, Bittrex has partnered with Coinbase to emphasize the necessity of clearer regulations within the cryptocurrency industry.
Legal documents reveal that Bittrex has filed a motion to dismiss the SEC’s lawsuit, asserting that the allegations made by the SEC are based on an erroneous interpretation of securities laws and that the exchange has not violated any legislation. Bittrex argues that the SEC’s objective with the lawsuit is to regulate the cryptocurrency industry through enforcement actions rather than establishing clear rules.
According to Bittrex’s court filing, they maintain that the SEC does not possess the authority to regulate cryptocurrencies as securities without explicit authorization from the United States Congress. By contesting the SEC’s interpretation of securities regulations, Bittrex aims to establish a more distinct regulatory framework that accommodates digital assets.
Bittrex’s motion to dismiss aligns with Coinbase’s approach as they present similar arguments, challenging the SEC’s allegations regarding the trading of investment contracts. They argue that while certain crypto assets may qualify as securities during their initial sale, they should not be classified as such when traded on secondary markets. Their contention is that digital tokens, once introduced and actively traded on secondary markets, should be treated as commodities or digital assets rather than securities.
This strategic alignment enables Bittrex to leverage Coinbase’s strong legal foundation and form a united defense against the SEC’s lawsuit.
In April 2023, the SEC filed a lawsuit against Bittrex, its co-founder William Shihara, and its international counterpart, Bittrex Global. The lawsuit alleges that the cryptocurrency exchange operated as an unregistered national securities exchange, broker, and clearing agency. The SEC claims that Bittrex facilitated the trading of digital assets that met the criteria for securities defined in U.S. federal securities laws without obtaining the required SEC registration as an exchange.
Additionally, the SEC alleges that Bittrex collaborated with crypto asset issuers to remove “problematic statements” from public channels, which could have prompted the agency to investigate the assets as securities.
Bittrex has previously been involved in other legal disputes. In 2022, the exchange agreed to pay $29 million to settle allegations that it violated U.S. sanctions laws by allowing customers in sanctioned countries to transact on its platform.
As of now, the SEC has not responded to Bittrex’s motion to dismiss. However, the SEC stated that it would vigorously defend its action against Bittrex in a statement.