- The U.S. Securities and Exchange Commission issued a Wells notice to crypto exchange Bittrex last month.
- The notice was likely issued before the exchange announced its decision to suspend all operations in the United States.
The Securities and Exchange Commission (SEC) has initiated enforcement actions against stablecoin issuers in the past. It has also issued Wells Notices to various crypto firms in the market. However, the regulatory watchdog has a new crypto organization in mind for a potential lawsuit.
The Wall Street regulator was reportedly leaning towards bringing a lawsuit against Bittrex, a crypto exchange based in Seattle, Washington.
Potential enforcement action ahead of departure from the U.S.
According to a report by the Wall Street Journal, the enforcement division of the SEC was inclined to recommend the agency to pursue a legal case against Bittrex. Staff from the enforcement division informed Bittrex of their intention to recommend the SEC to sue the crypto exchange. The entire debacle stood over alleged violations of investor-protection laws.
David Maria, the exchange’s General Counsel, revealed that news of the potential enforcement action was shared with them last month. As per the Wells notice, Bittrex has been accused of violating laws by conducting business as an exchange, broker-dealer, and clearinghouse. However, this was without first registering with the agency first.
News of the Wells notice came two weeks after the exchange announced that it would wind down its operations in the US. Furthermore, the exchange cited the lack of regulatory clarity as a major factor to exit the American market.
“Regulatory requirements are often unclear and enforced without appropriate discussion or input, resulting in an uneven competitive landscape.”
The decision was likely taken after the SEC issued the Wells notice to the firm. Additionally, the general counsel revealed that the exchange was exploring a way to register itself with the SEC.
However, they concluded that there was no way to get registered without shutting down the exchange’s revenue generating activities in the country.
“The lack of regulatory clarity here results in substantial costs and no certainty as to what can and can’t be offered,” Maria added.
