The seal of the U.S. Securities and Exchange Commission (SEC) is seen at their headquarters in Washington, D.C.
Reuters

Bittrex, the Seattle-based crypto asset trading platform founded in 2014, along with its co-founder and former CEO William Shihara as well as Bittrex Global Gmbh, the company's foreign affiliate, has agreed to settle charges filed by the U.S. Securities and Exchange Commission (SEC).

"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. I am grateful to the SEC staff for aggressively pursuing non-compliance in the crypto industry, resolving this matter, and bringing additional relief to harmed investors," Gurbir S. Grewal, Director of the SEC's Division of Enforcement, said in a press release.

On April 17, the major Wall Street regulator filed a lawsuit against Bittrex and its CEO at the U.S. District Court for the Western District of Washington.

In May, Bittrex filed for Chapter 11 Bankruptcy protection.

The SEC alleged that the crypto exchange platform operated as an "unregistered broker, exchange, clearing agency" by offering supposed unregistered securities crypto assets and other related services to U.S. investors.

Further, the financial watchdog accused Bittrex of directing issuers of crypto assets to delete public statements that could imply their tokens could be in violation of the country's securities law.

The SEC also alleged that Shihara, the exchange's CEO between 2014 and 2019, "directed issuers who sought to have their crypto assets made available for trading on Bittrex's platform to first delete from public channels certain "problematic statements."

Bittrex and the SEC reached a settlement amounting to $24 million, consisting of $14.4 million in disgorgement, $5.6 million in civil money penalties and $4 million in prejudgment interest on the disgorgement.

The crypto trading platform has until 90 days post its liquidation to settle with the SEC, and failure to do so would lead to the regulator seeking court judgment.

"Defendants agree that, as to Bittrex, the terms of the settlement reflected in this Consent and in the Judgment are subject to approval by the Bankruptcy Court in the Bankruptcy Case and shall be treated as an allowed, unsecured claim under the terms of any Plan filed by Bittrex in the Bankruptcy Case," the court filing read.

The Thursday filings further said that Bittrex will neither admit nor deny the allegations, as well as make any public statement that might imply the financial regulator didn't have a factual basis for its allegations.

It is worth noting that the charge the SEC filed against Bittrex is similar to the lawsuit it filed against Coinbase and Binance, two of the largest crypto exchange platforms by trading volume, in June.

Jai Waterman, an experienced business and technology leader currently serving as CEO of the decentralized trading ecosystem provider Blockstation, told International Business Times that a lot of crypto exchanges play several roles, that conflict with the law.

"What we've seen with crypto exchanges is they have created a market where they act as the Exchange, Broker Dealer, Depository, the Transfer Agent, and even as the Regulator in some cases," Waterman said.

"In this case, Binance operates as all of the above. It is no surprise to us that regulatory action would be taken and that the SEC is going after Binance and Coinbase; we expected it to happen sooner," the Blockstation CEO further told IBT.