Cryptocurrency exchange Bittrex has submitted a motion to dismiss in its legal dispute with the United States Securities and Exchange Commission (SEC).
In its recent court filing, Bittrex argues that the SEC does not have the authority to regulate cryptocurrencies as securities unless explicitly granted by Congress. This assertion challenges the SEC’s interpretation of existing securities regulations and seeks to establish a more defined regulatory framework accommodating digital assets.
In its motion to dismiss, Bittrex has adopted a similar approach to Coinbase, aligning its arguments closely with those made by the larger cryptocurrency exchange. This alignment indicates a strategic move by Bittrex to capitalize on the robust legal framework established by Coinbase and construct a unified defense against the SEC’s lawsuit.
Like Coinbase, Bittrex’s legal team identifies what they perceive as shortcomings in the SEC’s allegations regarding the trading of investment contracts. While both defendants acknowledge that the initial sale of certain crypto assets could be classified as securities contracts, they contend that the same classification does not extend to assets traded on secondary markets.
They argue that once an asset is launched and actively traded on secondary markets, it should no longer be considered a security but rather categorized as a commodity or another class of digital asset.
Moreover, Bittrex contends that the SEC did not adequately communicate that its actions were prohibited, emphasizing a defense strategy commonly employed by crypto defendants who challenge the SEC’s allegations.
In April, the SEC charged Bittrex and its co-founder, William Shihara, with running an unregistered national securities exchange. As per the complaint, Bittrex enabled the trading of digital assets that met the securities criteria outlined in U.S. federal securities laws without obtaining SEC registration as an exchange.
In the same complaint, the SEC also charged Bittrex Global — the foreign affiliate of Bittrex — with not registering as a national securities exchange.