According to recent reports, cryptocurrency exchange Bittrex received a Wells Notice from the U.S. Securities and Exchange Commission (SEC) in March indicating potential litigation The SEC’s enforcement division, sent the Wells notice before Bittrex decided to scale back its U.S. operations.
“Lack of regulatory clarity” in the U.S. adds to uncertainty for cryptocurrency exchanges
On Sunday, April 16, 2023, the Wall Street Journal (WSJ)reported that cryptocurrency exchange Bittrex had been notified of a lawsuit and possible enforcement action in the form of a Wells noticeA Wells notice is essentially a notice by the U.S. SEC of an individual or company’s A Wells notice is essentially a letter from the U.S. SEC notifying an individual or entity of its intent to take enforcement action against it. The notice provides the recipient with an opportunity to respond and often does not result in litigation.In early April, Bittrex informed the public that it had “made the difficult decision to cease operations in the United States as of April 30, 2023.”
Bittrex’s general counsel, David Maria, said Wells’ notice involved alleged violations of investor protection laws.According to a WSJ report by Dave Michaels and Mengqi Sun, Bittrex has been under SEC investigation since 2017 and the exchange has received “multiple subpoenas” from U.S. securities regulators during that time. Maria said the notice clarified SEC attorneys’ allegations that Bittrex acted as an exchange, broker-dealer, and clearinghouse without registering with the SEC.
The Bittrex counsel also noted that the exchange considered registering with the regulator last year, but found it was not feasible. Maria told the WSJ that the regulations surrounding cryptocurrencies in the U.S. are unclear.” The lack of clarity in the regulations has resulted in significant costs and uncertainty about what can be offered and what cannot,” the lawyer said. He revealed that the exchanges do not know if the SEC will file suit. If securities regulators decide to sue Bittrex, Maria said, the exchange will fight it in court unless the government “offers a reasonable settlement.”
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