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Crypto exchange Bittrex has taken a bold step by filing a court petition against the lawsuit launched by the U.S. Securities and Exchange Commission (SEC). The exchange claims that the SEC does not possess the authority to classify cryptocurrencies as securities unless explicitly authorized by the U.S. Congress.
Bittrex Adopts Coinbase’s Defense Strategy
At the core of Bittrex’s court filing lies the claim that the SEC is not vested with the power to regulate cryptocurrencies as securities unless explicitly granted by the U.S. Congress. Bittrex challenges the SEC’s interpretation of existing securities regulations, requesting the establishment of a clearer and more comprehensive regulatory framework for cryptocurrencies.
Bittrex has adopted a strategic approach similar to that of another crypto exchange, Coinbase, which the SEC has sued on similar grounds. By aligning its arguments closely with Coinbase’s defense strategy, Bittrex stands to benefit from the solid legal foundation laid by Coinbase, fostering a unified defense against the SEC’s lawsuit.
Both Bittrex and Coinbase voice their concerns about the SEC’s allegations regarding the trading of investment contracts. While they may concede that the initial sale of certain cryptocurrencies could fall under the classification of securities contracts, they argue that these assets should be reclassified as commodities or other types of cryptocurrencies after they are actively traded on secondary markets.
In addition, Bittrex adopts a common defense strategy used by crypto defendants opposing the SEC’s allegations, asserting that it was not clearly notified that its actions were prohibited.
SEC Filed Lawsuit Against Bittrex in April
In April, the SEC launched a lawsuit against Bittrex and its founding partner, William Shihara, accusing them of operating an unregistered securities exchange. The U.S. regulator claimed in its lawsuit against Bittrex that it facilitated the trading of cryptocurrencies that meet the criteria set out in U.S. federal securities laws without obtaining the necessary registration. The SEC also accused Bittrex’s foreign subsidiary, Bittrex Global, of failing to register as a national securities exchange.
This legal dispute between Bittrex and the SEC reflects the ongoing tension between crypto exchanges and regulatory agencies as they navigate the evolving landscape of crypto regulation.
