Headline: Bittrex asks court to void $24M SEC settlement after agency abandons crypto enforcement theory
Bittrex has asked a U.S. federal court to throw out a $24 million settlement it reached with the Securities and Exchange Commission in 2023, arguing the SEC has since abandoned the legal theory used to pursue the case.
In a motion filed this week, attorneys for the bankrupt Seattle-based exchange asked the court to vacate the earlier judgment and require the SEC to return the $24 million penalty. Bittrex’s lawyers say the regulator has reversed course under the current administration, dropping or pausing nearly all comparable crypto enforcement actions and publicly signaling that many tokens do not qualify as securities.
Key points
- The SEC originally sued Bittrex during the Biden administration, accusing the exchange of offering unregistered securities by allowing trading in certain crypto tokens. Bittrex settled in 2023 for $24 million without admitting or denying the allegations.
- In its motion, Bittrex’s legal team contends the SEC “conceded that its legal theory was wrong,” abandoned the enforcement strategy used against crypto platforms, and dismissed or dropped every similar investigation except Bittrex’s.
- Court records show the SEC previously asked permission to transfer the $24 million to the U.S. Treasury to be distributed to former Bittrex customers who allegedly suffered losses. Bittrex now asks the judge to halt that transfer and return the funds before any distribution.
- The exchange ceased U.S. operations shortly after the settlement, saying the regulatory and economic environment made continued business in the U.S. unviable.
- Separately, Bittrex agreed in 2022 to pay about $29 million to the U.S. Treasury over alleged sanctions and anti-money-laundering violations tied to activity involving countries such as Iran, Cuba and Syria.
Why this matters
Bittrex’s request raises questions about fairness and consistency in enforcement. If the court vacates the judgment, the SEC could be required to return settlement funds in cases where it has effectively abandoned the underlying legal theory. The dispute also underscores how changes in SEC leadership and policy can reshape regulatory risk for crypto firms—recent months have seen the agency dismiss or pause several high-profile crypto cases while senior officials have suggested many digital assets fall outside securities laws.
Next steps
The motion asks the judge to stop the Treasury transfer and vacate the 2023 judgment. The court will decide whether the SEC’s changed enforcement posture is a sufficient basis to unwind the settlement and return the money.
Stay tuned for court developments; a ruling could have broader implications for other exchanges and token issuers that settled with the SEC under the agency’s earlier crypto enforcement strategy.
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