Bittrex has taken a significant step in its ongoing legal battle with the U.S. Securities and Exchange Commission (SEC) by filing a request to dismiss. The cryptocurrency exchange had filed for bankruptcy earlier this year citing regulatory pressure from the commission.
In its recent filing, Bittrex makes the case that the SEC lacks the jurisdiction to regulate cryptos as securities sans a specific Congressional authorization. This claim contests how the SEC has interpreted current securities laws and aims to create a clearer regulatory framework that considers digital assets’ classification.
Bittrex has followed Coinbase’s lead in its request to dismiss, closely aligning its arguments with those of the more established crypto exchange. This strategic alignment demonstrates Bittrex’s intention to leverage the strong legal defense mounted by Coinbase, which resulted in a victory against the commission’s allegations.
Bittrex’s legal staff, much like Coinbase’s, points out what it believes to be flaws in the SEC’s claims about the trading of digital assets. Although both exchanges admit that the original sales of some crypto assets would qualify as securities, both contend that the classification should not be extended to assets exchanged on secondary markets. According to their stance, once an asset becomes available on secondary markets, it should be considered a distinct type of digital asset or even a commodity rather than a security.
“However, key elements are missing from the Commission’s claims,” the exchange claimed in its complaint. “Those claims also go against crucial securities law principles and are outside of its authority. It’s not acceptable. The pleading requirements and any applicable legal limitations should be rigorously followed when the government brings an enforcement action, especially after a lengthy investigation. In this case, the SEC did not respond effectively.”
In addition, Bittrex claims that the SEC neglected to adequately inform it that its actions were unlawful, underscoring a common line of defense utilized by cryptocurrency platforms in response to the SEC’s allegations.
The SEC charged Bittrex in April with running an illegal federal securities exchange. According to the SEC, six tokens offered by the exchange qualify as investment contracts under current law. Bittrex had neglected to register as an exchange with the SEC while facilitating the trading of digital assets that adhere to U.S. securities regulations.
In the same complaint, the SEC also accused Bittrex Global, a subsidiary operating internationally, of failing to register as a federal securities exchange.
Other actors such as Stronghold Digital Mining Inc. (NASDAQ: SDIG) are likely to take a keen interest in the way these lawsuits shape the immediate future of the crypto industry in the United States.
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