Bittrex Challenges SEC Lawsuit Over Lack of Congressional Authorization

• What Bitrex has filed a motion to dismiss the SEC’s case against it
• Why It believes the SEC requires congressional authorization to regulate crypto assets
• What next The judgment could shape crypto regulation frameworks in the future

Bittrex, a crypto exchange, has filed a motion to dismiss a lawsuit brought against it by the U.S. Securities and Exchange Commission (SEC).

Bitrex is challenging the SEC’s authority to regulate crypto assets as securities without Congress’s authorization. 

The exchange wants to establish a clearer regulatory framework that aligns with the unique nature of digital assets. Bittrex’s move mirrors Coinbase’s actions, as both exchanges aim to unite their defense against the SEC’s allegations.

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Bittrex Seeks Regulatory Clarity

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In April, the SEC filed a lawsuit against Bittrex and its co-founder, William Shihara. The lawsuit accuses them of operating an unregistered national securities exchange. Bittrex allegedly facilitated the trading of digital assets meeting securities criteria without registering with the SEC. The SEC also charged Bittrex’s foreign affiliate, Global GmbH, for failing to register as a national securities exchange. 

In response, Bittrex chose to close its U.S. operations.

Bittrex Adopts Coinbase’s Defense Strategy in Legal Battle 

Bittrex’s legal team has taken inspiration from Coinbase’s defense strategy. Both exchanges argue that while the initial sale of specific crypto assets may be considered securities contracts, the same classification should not apply to assets being traded on secondary markets. 

They believe that once an asset is actively traded on secondary markets, it should be treated as a commodity or another digital asset class rather than a security.

Bittrex further asserts that the SEC did not provide clear notice that its actions were on hold. This defense strategy is commonly used by crypto defendants challenging the SEC’s claims. Bittrex emphasizes the importance of explicit guidelines from the SEC to ensure market participants are aware of regulatory boundaries.

Bittrex’s motion to dismiss the lawsuit is a significant development as the outcome of the case could impact cryptocurrency regulation in the U.S.

Gary Gensler’s SEC seeks to bring the tokens of these projects under securities regulations to promote stability. Regulators’ actions aim to prevent fraud and deceptive practices. Market participants perceive the SEC’s efforts as severe and stringent.

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