According to Reuters, the US Securities and Exchange Commission filed a complaint in a US district court in Washington against former CEO William Shihara that he allegedly worked with crypto asset issuers looking to make their tokens available for trading on Bittrex's platform to remove public statements that would cause regulators to investigate those token offerings as securities.
The SEC also charged Bittrex's foreign affiliate, Bittrex Global GmbH for failing to register as a national securities exchange. This charge was connected to the operation of a single shared order book along with Bittrex.
In a reply, Bittrex Inc stated that its platform was not used to offer or trade securities and that it did not offer products that were investment contracts. Furthermore, Bittrex Global stated that it has no customers in the US and that it will fight the SEC’s allegations in court.
The SEC went a step further and alleged that Bittrex earned at least USD 1.3 billion in revenue from transaction fees from investors, among other things, while servicing them as a broker, exchange and clearing agency from 2017 to 2022.
At the beginning of April 2023, Bittrex informed its US customers that it would shut down its operations in the US at the end of the month. The company assured its customers that all their funds are safe and available to withdraw. However, they motivated the decision to wind down US operations because it’s no longer economically viable for them to continue operating in the current regulatory and economic environment.
According to Bittrex, current regulatory requirements in the US are often unclear and enforced without appropriate discussion or input, which resulted in an uneven competitive landscape. Bittrex emphasised that clients with KYC requirements met will be able to retrieve their funds and urged them to do so by 30 April 2023. Trading on the platform was still permitted until 14 April 2023.
Reuters reports that, in October 2022, Bittrex agreed to pay USD 29 million in fines to the US Treasury Department for ‘apparent violations’ of sanctions on certain countries and anti-money laundering law. Specifically, Bittrex failed to prevent people located in the sanctioned jurisdictions of Ukraine's Crimea region, Cuba, Iran, Sudan and Syria from using its platform between March 2014 and December 2017, according to OFAC.
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