Crypto exchange Bittrex has filed a motion to dismiss a lawsuit against them by the United States Securities and Exchange Commission (SEC).
Bittrex teamed up with Coinbase to defend itself against the SEC, highlighting the need for clearer regulations in the cryptocurrency industry.
Court documents show that Bittrex has filed a motion to dismiss the SEC’s lawsuit. Bittrex argued that the SEC’s allegations were based on a flawed interpretation of the securities laws and that the exchange had not violated any legislation.
Bittrex also argued that the SEC’s lawsuit aimed to regulate the cryptocurrency industry through enforcement actions rather than rulemaking.
According to its court filing, Bittrex asserts that the SEC lacks the power to regulate cryptocurrencies as securities without explicit authorization from the United States Congress. By challenging the SEC’s interpretation of securities regulations, Bittrex aims to establish a clearer regulatory framework to accommodate digital assets.
Crypto exchanges unite
Bittrex’s motion to dismiss mirrors Coinbase’s approach, as they align their arguments closely with the larger cryptocurrency exchange, challenging the SEC’s allegations regarding the trading of investment contracts.
They argue that while certain crypto assets may qualify as securities contracts during the initial sale, they should not be classified as such when traded on secondary markets.
Their argument revolves around the idea that it shouldn’t be treated as security immediately after introducing a digital token and actively trading on secondary markets. Instead, they believe it should be classified as a commodity or digital asset.
This strategic alignment allows Bittrex to leverage Coinbase’s solid legal foundation and build a unified defense against the SEC’s lawsuit.
The SEC filed a lawsuit against Bittrex, its co-founder William Shihara, and its overseas counterpart, Bittrex Global, in April 2023, alleging that the cryptocurrency exchange had operated an unregistered national securities exchange, broker, and clearing agency. According to the complaint, Bittrex facilitated the trading of digital assets that met the criteria for securities outlined in U.S. federal securities laws, all without obtaining proper SEC registration as an exchange.
The SEC also alleged that Bittrex had coordinated with issuers of crypto assets to remove “problematic statements” from public channels that could have led the agency to investigate the assets as securities.
Bittrex has also been involved in other legal disputes previously. In 2022, Bittrex agreed to pay $29 million to settle allegations that it violated U.S. sanctions law by allowing customers in sanctioned countries to transact on its platform.
The SEC has not yet filed a response to Bittrex’s motion to dismiss. However, in a statement, the SEC said it would vigorously defend its action against Bittrex.