Bittrex Receives Wells Notice From SEC for Alleged Investor-Protection Law Violations – The Wall Street Journal (WSJ) reported, that the cryptocurrency exchange Bittrex has received a Wells notice informing them of a prospective lawsuit and enforcement action. A Wells notice is essentially a letter from the United States Securities and Exchange Commission informing an individual or company of the regulator’s intention to conduct enforcement action against them.
The notification gives the addressee an opportunity to respond and, in most cases, does not result in litigation. Bittrex said at the beginning of April that it had “made the difficult decision to wind down U.S. operations, effective April 30, 2023.” According to Bittrex’s general counsel, David Maria, the Wells notification relates to possible violations of investor protection legislation.
According to a WSJ report by Dave Michaels and Mengqi Sun, Bittrex has been under SEC investigation since 2017, and the exchange has received “multiple subpoenas” from the US securities regulator during that time. According to Maria, the notice included SEC attorneys’ claims that Bittrex operated as an exchange, broker-dealer, and clearinghouse without being registered with the SEC.
Bittrex’s general counsel also stated that the exchange investigated registering with the authority last year but discovered that it would be impossible. According to Maria, the regulations around cryptocurrencies in the United States are unclear. “The lack of regulatory clarity results in significant costs and uncertainty about what can and cannot be offered,” the lawyer stated.
He indicated that the exchange is unsure whether the SEC will file a lawsuit. If the Securities and Exchange Commission decides to sue Bittrex, Maria stated that the exchange will fight the action in court unless the government “presented a reasonable settlement offer.”