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Bittrex, a bankrupt cryptocurrency exchange, is challenging the authority of the US Securities and Exchange Commission (SEC) to regulate its activities through securities violations. This dispute, if won, could limit the SEC’s power to oversee cryptocurrency exchanges and other digital asset companies.
The first line of the motion read:
“Following a six-year investigation in which the Securities and Exchange Commission (“SEC” or “Commission”) declined to name a single cryptocurrency asset (token1) that it alleged Bittrex, Inc. (“Bittrex”) was illegally listed for trading on its platform (the “Bittrex Platform”), the SEC has now charged Bittrex with multiple violations of securities laws for failure to register.”
While the SEC maintains that Bittrex acted as an unregistered stock exchange, broker-dealer and clearing house, the bankrupt exchange maintains that the Commission left them no choice but to guess which of the hundreds of other tokens traded on its platform, if so , which. could also be certainties, according to the Commission, as it began to close its operations in the US.
The motion argued that Congress must give the SEC “clear congressional authorization” to regulate securities that are tokens, arguing that the Exchange Act or the Securities Act of 1933 does not give the SEC the right to flippantly declare tokens as securities. to declare.
Bittrex argues that interpreting pre-digital age legislatures must get congressional approval because “'[s]sometimes old statutes can be written in a way that applies to new and previously unforeseen situations […] But an agency’s attempt to apply an old statute focused on one problem to solve a new and different one could also be a warning sign that it is acting without clear congressional authority.” referring to West Virginia v. EPA case, 2022.
SEC vs Crypto
The SEC is actively targeting cryptocurrency companies, accusing them of securities law violations despite evidence to the contrary.
Coinbase filed a motion to dismiss on the same principle, stating that the SEC acted in “abuse of power.” Coinbase argues that the SEC’s lawsuit does not constitute a valid legal claim because the SEC’s application of securities laws to these tokens deviates significantly from existing regulatory standards:
“For years, Coinbase […] has pleaded with the SEC for guidance on how it believes federal securities laws apply to the digital asset industry, as the SEC’s actions reflected an escalating but undisclosed change in its own view of its authority.
And as industry leaders try to fight the establishment that is bringing them down, the Blockchain Association held onto its support and demanded that SEC Chairman Gary Gensler resign and withdraw from the matter.
The paper, written by the Association’s Jake Chervinsky and Marisa Coppel, argues that the SEC already has extreme biases about the crypto industry and how Gensler defines securities. While the Commission is unable to define securities despite being asked to do so, SEC Chairman Gary Gensler has made it clear that he has a different view: in his mind, all digital assets except bitcoin are securities, end of story. “