In a recent court filing, Bittrex argued that the SEC does not have the authority to regulate cryptocurrencies like the securities, unless expressly granted by Congress. Also in the motion to dismiss, Bittrex took a similar approach to Coinbase, aligning its argument closely with those made by a larger exchange. It can be seen that the exchange is taking advantage of the strong regulatory framework established by Coinbase and building a unified defense system against the SEC.
Like Coinbase, Bittrex’s legal team identified what it considers to be deficiencies in the SEC’s allegations regarding the trading of investment contracts. While both defendants acknowledged that the sale of certain crypto assets could be classified as securities contracts, they argued that the same classification could not apply to assets traded on the secondary market, which should be treated like a commodity or another digital asset.
Previously, the SEC accused Bittrex and co-founder William Shihara of illegally operating a securities exchange. According to the complaint, the exchange enabled the trading of digital assets that met the securities criteria outlined in US federal securities laws without registering with the SEC as an exchange. At the same time, the SEC also accused Bittrex Global – Bittrex’s foreign branch – of not registering as a national securities exchange.
Bittrex is one of the largest crypto exchanges in the US, having accounted for 23% market share of USD support at the start of 2018. However, the exchange is having extremely difficult days. After closing the US branch for a month, the platform filed for bankruptcy. Last October, the exchange was also fined $29 million for violating the embargo and anti-money laundering.