Bittrex has asked a U.S. federal court to overturn its $24 million settlement with the Securities and Exchange Commission after the regulator abandoned the crypto enforcement approach used against the exchange under the Biden administration.
Summary
- Bittrex has asked a federal judge to cancel its $24 million SEC settlement after the regulator dropped similar crypto cases.
- Court filings stated that the SEC now no longer considers most crypto tokens to be securities under its current approach.
- The bankrupt exchange has also requested that the SEC return funds before the money is transferred to former customers through the Treasury Department.
According to a motion filed this week by attorneys representing Bittrex, the bankrupt crypto exchange has requested that the court vacate the earlier judgment and direct the SEC to return the $24 million penalty paid in 2023.
The filing argues that the regulator no longer supports the legal theory used to pursue the case, after repeatedly stating under President Donald Trump’s administration that most crypto tokens do not qualify as securities.
Filed in federal court on Monday, the motion stated that the SEC has already dropped nearly all comparable enforcement actions and investigations involving crypto exchanges and token issuers. Bittrex’s legal team argued that continuing to enforce the settlement while abandoning similar cases would be unfair treatment.
“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,” Bittrex’s attorneys wrote in the filing.
SEC’s crypto reversal becomes central to Bittrex request
The SEC originally sued Bittrex during Joe Biden’s presidency, accusing the Seattle-based exchange of offering unregistered securities through crypto token trading services. Bittrex later agreed to settle the case for $24 million without admitting or denying the allegations.
Court records cited in the latest filing also pointed to a March request from the SEC seeking permission to transfer the $24 million to the U.S. Treasury Department for distribution to former Bittrex customers who allegedly suffered financial losses.
Bittrex’s attorneys have now asked the judge to stop the transfer process and return the funds before any distribution takes place.
Operations at the exchange were shut down shortly after the settlement, with Bittrex stating at the time that continuing business operations in the existing U.S. regulatory and economic environment was no longer economically viable.
Separate from the SEC case, Bittrex reached another settlement with the U.S. Treasury Department in 2022 over alleged sanctions violations involving countries including Iran, Cuba, and Syria. Treasury officials announced at the time that the exchange had agreed to pay roughly $29 million tied to what regulators described as apparent violations of sanctions and anti-money laundering rules.
Since Trump returned to office last year, SEC leadership has repeatedly pulled back from the agency’s earlier crypto enforcement campaign. The regulator has dismissed or paused several high-profile lawsuits against crypto companies, while senior officials have publicly stated that many digital assets fall outside securities laws.
