In April, the SEC filed a lawsuit against Bittrex and its co-founder William Shihara, accusing them of trading in unregistered securities. The regulator also accused the exchange’s foreign subsidiary, Bittrex Global GmbH, of failing to register as a broker-dealer.
Due to the difficult regulatory environment, Bittrex was forced to stop working with U.S. customers, and in May the exchange filed for bankruptcy, spreading to several of its subsidiaries.
In its motion to dismiss the lawsuit, Bittrex management argues that even if the initial sale of any crypto assets can be considered an investment contract, crypto assets traded on the secondary market cannot qualify as securities.
Bittrex is also challenging the SEC’s authority to regulate crypto-assets because the regulator does not have congressional authorization to do so. The management of the exchange believes that first of all, the SEC should develop a clear regulatory framework for the regulation of digital assets, taking into account their characteristics. Then cryptocurrencies will know what rules they are required to follow, Bittrex said.
Marketplace Coinbase also recently filed a similar motion with the court. Coinbase lawyers argue that no crypto-asset placed on the site can be called a stock or a bond.