Bittrex

SEC charges Bittrex with unregistered operations, calls 6 tokens securities

The U.S. Securities and Exchange Commission has filed a complaint against the Seattle-based exchange as Bittrex prepares to stop offering services in the United States.

The United States Securities and Exchange Commission (SEC) has charged the crypto asset trading platform Bittrex and its cofounder and former CEO William Shihara for operating an unregistered national securities exchange, broker, and clearing agency. The agency filed a separate charge against Bittrex Global.

The SEC is pressing four charges of Exchange Act violations against the companies and Shihara in the U.S. District Court Western District of Washington. Bittrex Global is also being charged “in connection with its operation of a single shared order book along with Bittrex.”

The SEC argued in its complaint that the OMG, Dash (DASH), Algorand (ALGO), Monolith (TKN), Naga (NGC) and IHT Real Estate Protocol (IHT) tokens traded on Bittrex are securities. The SEC has been criticized in the past for the practice of “regulation by enforcement” by claiming tokens are securities only at the time when it files such complaints, and not prior.

Today we charged crypto asset trading platform Bittrex Inc. and its co-founder and former CEO William Shihara for operating an unregistered national securities exchange, broker, and clearing agency.https://t.co/kBsIFMp7ZA

— U.S. Securities and Exchange Commission (@SECGov) April 17, 2023

The agency also claims Bittrex and Shihara advised clients to delete “problematic statements” to avoid regulatory scrutiny. The SEC complaint seeks disgorgement, penalties and permanent injunctions against the defendants in a jury trial. SEC Enforcement Division Director Gurbir Grewal said in a statement:

“Today’s action not only holds Bittrex accountable for misconduct that we allege put investors at risk, but should also send a message to other non-compliant crypto market intermediaries to follow the federal securities laws or be held accountable for their violations.”

Bittrex was expecting the SEC action and reportedly received a Wells notice warning it of the impending action in March. The exchange had already announced its intention of closing down U.S. operations on April 30 due to the regulatory environment.

Bittrex released a statement that said, in part:

“For over five years, […] the SEC would not provide notice of the specific conduct that it thought violated the federal securities laws. Specifically, on multiple occasions, we asked them to tell us what digital assets on our platform they viewed as securities, so that we could review and potentially delist them. They refused to do so.”

Bittrex was hit with charges from the U.S. Treasury’s Office of Foreign Assets Control and Financial Crimes Enforcement Network in October for violating sanctions programs and the Bank Secrecy Act.

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Update (April 17, 2023 at 7:06 pm UTC): This article has been updated to add a response from Bittrex.

US crypto exchange Bittrex faces potential action from SEC: Report

Bittrex had already started winding down operations by the time it received a notice of potential action from the SEC, the general counsel said.

The United States-based cryptocurrency exchange Bittrex is reportedly facing potential action from the U.S. securities regulator despite preparing to shut down local operations.

The enforcement division of the U.S. Securities and Exchange Commission (SEC) is inclined to recommend the agency sue Bittrex over alleged violations related to investor protection, The Wall Street Journal reported on April 16.

The enforcement unit informed Bittrex about potential action from the SEC in March, Bittrex’s general counsel David Maria reportedly said. By that time, the Seattle-based crypto firm had already started the process of winding down its U.S. operations, the attorney stated.

In the notice of potential enforcement action — known as a Wells notice — the SEC wrote that Bittrex had violated laws by doing business as an exchange, broker-dealer and clearinghouse without registering with the regulator.

According to Bittrex’s general counsel, the company discussed with the SEC in late 2022 how to register its operations. The crypto firm found that there was no opportunity to follow the rules of the SEC without essentially ceasing all of its revenue-producing activities in the country.

Attorney Maria stressed that Bittrex’s inability to comply with the SEC rules was due to the agency not providing clear regulations for crypto in the first place. He stated:

“The lack of regulatory clarity here results in substantial costs and no certainty as to what can and can’t be offered.”

Bittrex is not aware whether the SEC is going to file a lawsuit now that the company is terminating operations in the United States, Maria said. If the agency decides to take action, Bittrex will litigate unless regulators “came with a reasonable settlement offer,” the counsel reportedly added.

The news came soon after Bittrex announced plans to stop all operations in the United States on March 31, citing the challenging regulatory and economic environment. The exchange advised U.S. customers to withdraw their funds by April 30, 2023.

Before it decided to leave the United States, Bittrex had faced some issues at home. In 2022, Bittrex agreed to pay more than $29 million in fines from the U.S. Department of the Treasury’s Office of Foreign Assets Control and Financial Crimes Enforcement Network. The settlement was related to sanctions violations in the Crimea region, Cuba, Iran, Sudan and Syria between 2014 and 2017.

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Bitcoin’s banking crisis surge will ‘attract more institutions’: ARK’s Cathie Wood

Cathie Wood was impressed that Bitcoin “moved in a very different way” compared to the equity market in response to the recent banking crisis.

The value proposition of Bitcoin (BTC) is on full display amid the current banking crisis, which will only “attract more institutions” to the BTC market over time, ARK Invest CEO Cathie Wood believes.

Wood shared her thoughts on BTC’s recent price surge in a March 21 Bloomberg interview, stating its price behavior through the crisis “is going to attract more institutions.”

“The fact that Bitcoin moved in a very different way from the equity markets, in particular, was quite instructive,” she added.

ARK Investment Management CEO Cathie Wood says the behavior of the Bitcoin’s price through the latest banking turmoil will attract more institutions and investors https://t.co/2d8cT7SX3n pic.twitter.com/Eaymh05lhq

— Bloomberg Crypto (@crypto) March 21, 2023

Institutional interest in Bitcoin may have already arrived according to Oliver Linch, the CEO of Seattle-based crypto exchange Bittrex.

Linch noted in a March 21 interview on The Wolf Of All Streets Podcast that many big banks bought into crypto as an investment product well before the recent banking crisis:

“The big talking point of this bear market is institutional interest in crypto. Every big bank now has a substantive crypto desk, not just for trading, but for partnerships as well.”

However, he noted there’s still a divide between traditional financial institutions and crypto firms which has caused headwinds in institutional adoption over the last few months.

“Historically, those big players have been the biggest drivers of innovation,” he said, before claiming the two sides are currently “stuck in a bit of a rut” and the “big change” won’t happen until they stop fighting for superiority.

“It’s not crypto versus Goldman Sachs or crypto versus institutions. It’s a race to who can do crypto better.”

As for the impact on Bitcoin’s price from the institutional interest, Wood explained in the interview that ARK Invest’s $1-1.5 million BTC price prediction by 2030 was made on the back of an institutional investor BTC allocation analysis, which estimates most firms to allocate between 2.5% to 6.5% to BTC in their investment portfolios.

“These are the sorts of allocations that they would have made to emerging, new categories of assets like real estate in the 70s and small caps in the 80s and 90s,” Wood added.

*ARK Invest estimates the BTC price towards $1.5 million will be pushed by institutional investors allocating between 2.5-6.5% of their portfolio into BTC. Source:* *ARK Invest*

Linch, on the other hand, believes that “aggressive” institutional adoption will come when opportunities become more easily identifiable:

“Show them a way that it can be done and it can make them money and I guarantee you they won’t stand in the way of that. They’ll be pedal to the metal to exploit that opportunity.”

Positive sentiment has surrounded Bitcoin following the collapses of Silvergate Bank, Silicon Valley Bank and Signature Bank. The BTC price has surged 43.6% since its most recent low on March 11, compared to a 25.3% increase in the broader crypto market over that time, according to CoinGecko data.

Magazine: Unstablecoins: Depegging, bank runs and other risks loom

Bitcoin’s banking crisis surge will ‘attract more institutions’: ARK’s Cathie Wood

Cathie Wood was impressed that Bitcoin “moved in a very different way” compared to the equity market in response to the recent banking crisis.

Wood shared her thoughts on BTC’s recent price surge in a March 21 Bloomberg interview, stating its price behavior through the crisis “is going to attract more institutions.”

“The fact that Bitcoin moved in a very different way from the equity markets, in particular, was quite instructive,” she added.

ARK Investment Management CEO Cathie Wood says the behavior of the Bitcoin’s price through the latest banking turmoil will attract more institutions and investors https://t.co/2d8cT7SX3n pic.twitter.com/Eaymh05lhq

— Bloomberg Crypto (@crypto) March 21, 2023

Institutional interest in Bitcoin may have already arrived, according to Oliver Linch, the CEO of Seattle-based crypto exchange Bittrex.

Linch noted in a March 21 interview on The Wolf Of All Streets podcast that many big banks bought into crypto as an investment product well before the recent banking crisis:

“The big talking point of this bear market is institutional interest in crypto. Every big bank now has a substantive crypto desk, not just for trading, but for partnerships as well.”

However, he said that there’s still a divide between traditional financial institutions and crypto firms, which has caused headwinds in institutional adoption over the last few months.

“Historically, those big players have been the biggest drivers of innovation,” he said, adding that the two sides are currently “stuck in a bit of a rut” and that the “big change” won’t happen until they stop fighting for superiority.

“It’s not crypto versus Goldman Sachs or crypto versus institutions. It’s a race to who can do crypto better.”

As for the impact on Bitcoin’s price from the institutional interest, Wood explained in the interview that ARK Invest’s $1-1.5 million BTC price prediction by 2030 was made on the back of an institutional investor BTC allocation analysis, which estimates most firms would allocate between 2.5% to 6.5% to BTC in their investment portfolios.

“These are the sorts of allocations that they would have made to emerging, new categories of assets like real estate in the 70s and small caps in the 80s and 90s,” Wood added.

Linch, on the other hand, believes that “aggressive” institutional adoption will come when opportunities become more easily identifiable:

“Show them a way that it can be done and it can make them money and I guarantee you they won’t stand in the way of that. They’ll be pedal to the metal to exploit that opportunity.”

Positive sentiment has surrounded Bitcoin following the collapses of Silvergate, Silicon Valley Bank and Signature banks. BTC has surged 43.6% since its most recent low on March 11, compared with a 25.3% increase in the broader crypto market over that time, according to CoinGecko data.

Magazine: Unstablecoins: Depegging, bank runs and other risks loom

Protocol Labs, Chainalysis and Bittrex add to crypto layoff season

Crypto execs suggested that the “extremely challenging” times forced them to cut jobs to “weather this extended” crypto winter.

Several crypto firms have made job cuts this week amid the ongoing crypto winter, retaining “impactful” employees as they prepare for a “longer downturn.”

At least 216 jobs were slashed between three crypto firms — open-source software laboratory Protocol Labs, blockchain data firm Chainalysis and cryptocurrency exchange Bittrex, with reductions of 89, 83 and 44 employees respectively.

Juan Benet, CEO of Protocol Labs, the company that launched Filecoin (FIL), announced the job cuts in a blog post on Feb. 3, stating that the company has had to focus its headcount “against the most impactful and business-critical efforts.”

He stated that the company decided to cut “89 roles,” approximately 21% of its workforce, to ensure it is well positioned to “weather this extended winter.”

Benet suggested that the company must “prepare for a longer downturn,” given it has been an “extremely challenging” time for the crypto industry.

Meanwhile, Bittrex employees were informed by CEO Richie Lai over email on Feb. 1 that the reduction to its workforce is to “ensure the long-term viability” of the company.

The email was leaked via Twitter on Feb. 2. Lai stated that despite the leadership team “working aggressively” to reduce expenses and increase efficiencies over the last several months, the efforts have not produced the “results necessary.“

Lai added that the market conditions have forced the company to reset its strategy and balance its “investments with the new economic environment.”

According to Washington State employment data on Feb. 2 it was revealed that Bittrex cut 83 jobs.

Maddie Kennedy, director of communications at Chainalysis, told Forbes on Feb. 1 that those “primarily in sales” at the company were let go, as 44 of its 900 employees, approximately 4.8% of the workforce, were slashed.

These layoffs come after news that at least 2,900 staff were cut across 14 crypto firms in January.

Coinbase had the largest layoffs amongst those firms, cutting 950 of its staff on Jan. 10.

Meanwhile, competitor exchanges Crypto.com, Luno and Huobi had reductions of approximately 500, 330 and 320 staff, respectively.

Cointelegraph reached out for comment from Protocol Labs, Chainalysis and Bittrex but did not receive a response by publication.

US Treasury’s OFAC and FinCEN announce $29M in enforcement actions again Bittrex

Bittrex agreed to pay more than $29 million in a settlement with FinCEN, but the regulator said it will credit a $24-million payment “to settle its potential liability with OFAC.”

The United States Department of the Treasury’s Office of Foreign Assets Control and Financial Crimes Enforcement Network took enforcement actions against crypto exchange Bittrex for allegedly violating sanctions programs as well as reporting requirements under the Bank Secrecy Act, or BSA.

In an Oct. 11 announcement, the U.S. Treasury said Bittrex had agreed to a more than $24-million settlement with OFAC for violations of “multiple sanctions programs” by failing to prevent individuals based in the Crimea region, Cuba, Iran, Sudan and Syria from conducting roughly $263 million in crypto transactions between 2014 and 2017. According to the Treasury Department, Bittrex did not screen users based on accessible location information in the sanctioned countries using internet protocol addresses.

“When virtual currency firms fail to implement effective sanctions compliance controls, including screening customers located in sanctioned jurisdictions, they can become a vehicle for illicit actors that threaten U.S national security,” said Andrea Gacki, director of OFAC. “Virtual currency exchanges operating worldwide should understand both who — and where — their customers are.”

In addition, FinCEN announced parallel enforcement actions in which Bittrex agreed to pay more than $29 million. However, the financial regulator said it will credit Bittrex’s $24-million payment “to settle its potential liability with OFAC.”

According to FinCEN, the crypto exchange “failed to maintain an effective AML program” from 2014 to 2018, “resulting in significant exposure to illicit finance” through privacy coins. The regulator further alleged that Bittrex failed to document many transactions in sanctioned jurisdictions from 2014 to 2017 through suspicious activity reports.

Acting Director of FinCEN Himamauli Das added:

“Virtual asset service providers are on notice that they must implement robust risk-based compliance programs and meet their BSA reporting requirements. FinCEN will not hesitate to act when it identifies willful violations of the BSA.”

In a statement to Cointelegraph, a Bittrex spokesperson said that “none of the allegations” from FinCEN or OFAC related to the exchange’s practices after 2018 and it was “pleased to have fully resolved this matter.” The company added that it “employed third-party experts and service providers” to review its compliance with sanctions and Anti-Money Laundering policies.

In December 2020, the U.S. Treasury announced a $98,830 settlement with BitGo over the digital asset custodian allowing residents of many of the same sanctioned jurisdictions — Crimea, Cuba, Iran, Sudan and Syria — to conduct crypto transactions between 2015 and 2019. In February 2021, the government department fined BitPay $507,375 for facilitating “approximately $129,000 worth of digital currency-related transactions with BitPay’s merchant customers” in sanctioned areas.

FTX, Bybit rise in web traffic despite overall traffic drop on CEXs

Web traffic on FTX surged 123% YoY, while major exchanges such as Coinbase and Binance were down 46% and 40% traffic-wise, respectively.

The ongoing cryptocurrency winter has triggered an overall decline in interest in centralized crypto exchanges (CEX), but some crypto trading platforms have seen a rise in website traffic.

A few major global crypto exchanges, including Sam Bankman-Fried’s FTX, have experienced a significant increase in web traffic despite the bear market of 2022, according to the website analytics platform Similarweb.

According to data shared with Cointelegraph, web traffic on the FTX crypto exchange had surged as much as 123% year-over-year (YoY) by June 2022.

Trading platforms WhiteBit and Bybit have seen even bigger growth in interest, with traffic surging 244% and 160% over the past year, respectively. The KuCoin crypto exchange has also seen an increase in interest over the past year, with its website’s traffic edging up 50% YoY.

The traffic growth of FTX and Bybit has come against the backdrop of the majority of CEXs experiencing a massive drop in interest in their websites.

Major United States-based crypto exchange Coinbase saw its web traffic plummet 46% YoY, experiencing one of the biggest losses among U.S. crypto exchanges. Rival exchanges Kraken and Bittrex have also posted traffic losses, with visits dropping 38% and 54%, respectively.

The traffic on the global Binance crypto exchange tumbled about 40%, according to data from Similarweb. The major blockchain browser and crypto wallet Blockchain.com also saw its traffic dropping 30%.

Crypto-friendly stock trading app Robinhood has also plummeted traffic-wise, with website visits dipping 65% YoY.

Despite a significant drop in website visits on many CEXs, the traffic on most crypto exchanges has still been up over the past three years. As such, web traffic on Coinbase, Kraken and Binance is up 36%, 105% and 263% over the period, respectively. Growing-traffic exchanges such as Bybit and FTX have seen their visits skyrocket 1,600% and 9,400% over the period, respectively.

In contrast, some platforms like Bittrex.com and Blockchain.com have seen some traffic decline even over a longer period of time, with visits dropping 67% and 54% over the past three years, respectively.

The discrepancy between traffic movements on different crypto exchanges might be a reason for how different companies position themselves during tough times on the market.

According to David Carr, senior insights manager at Similarweb, some exchanges like FTX have demonstrated more courage than other firms by forcing acquisitions and helping bankrupt platforms.

“More recently, FTX has been in the news as an acquirer or potential acquirer of other companies, such as some of the crypto lending and DeFi companies that were struggling but that FTX and its CEO thought had value,” Carr said. In the meantime, Coinbase might have suffered from “unfortunate headlines” about disclosing what would happen to customer funds if the company went bankrupt, he said, adding:

“Not that Coinbase is necessarily on the verge of bankruptcy, but just having the company name and bankruptcy in the same sentence was not a good thing.”

Coinbase is one of the largest crypto exchanges in the United States and has been a publicly traded company since April 2021. The exchange has been involved in a number of regulatory conflicts recently, with U.S. authorities arresting a former Coinbase manager on allegations of insider trading in July. Already under investigation by the Securities and Exchanges Commission, Coinbase was slapped with two fresh legal claims last week.