Bittrex Seeks Return of $24M SEC Settlement
The defunct exchange asked a federal judge to vacate its 2023 $24 million SEC settlement and order the agency to return the funds after the regulator reversed its view on token classification.
Bittrex filed a motion this week asking a federal judge to vacate its 2023 $24 million settlement with the U.S. Securities and Exchange Commission and to order the agency to return the money, saying the SEC has reversed its view on whether many crypto tokens are securities.
The SEC sued Bittrex in 2023, alleging the exchange offered sales of crypto tokens that were unregistered securities. Bittrex agreed to pay $24 million to resolve that case.
The filing notes the settlement followed a separate $29 million penalty paid to the Treasury Department the year before for apparent violations of sanctions involving Iran, Cuba and Syria. Bittrex shut down soon after the SEC settlement, saying continued U.S. operations were not economically viable given the regulatory and economic environment at the time.
Bittrex’s attorneys argue the SEC’s later change in enforcement posture undermines the original lawsuit and settlement. The filing argued: “Two-and-a-half years after extracting a settlement from a bankrupt cryptocurrency exchange premised on the legal theory that the tokens that traded on the exchange were securities, the SEC has (a) conceded that its legal theory was wrong and those tokens were not securities, (b) acknowledged that its enforcement strategy was misguided from the start, and (c) dropped every similar case and investigation except this one.”
The filing says SEC officials have signaled the agency no longer views the majority of crypto tokens as securities and have declined to pursue many prior cases against crypto firms. The SEC moved to forfeit Bittrex’s $24 million to the Treasury Department so the funds could be distributed to former customers who the regulator says suffered financial harm.
Bittrex asked the court to direct the SEC to return the $24 million to the company before any distribution is made. A federal judge will consider the motion to vacate the prior judgment and the request for return of funds.
An SEC spokesperson declined to comment on the filing. The case remains pending in federal court.
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