Bittrex seeks dismissal of SEC lawsuit, arguing lack of authority.

Crypto exchange Bittrex is seeking to have its ongoing case with the United States Securities and Exchange Commission (SEC) dismissed. The exchange believes that the SEC does not have authority over the case and is requesting that the court dismiss the lawsuit.

Bittrex filed a motion to dismiss with the United States District Court for the Western District of Washington in Seattle. The filing named both Bittrex and co-founder and former CEO William Shihara as defendants, and argued against the Commission’s jurisdiction.

According to Bittrex, the SEC conducted a six-year investigation and failed to provide any evidence that the exchange unlawfully listed a token. Bittrex also argues that the SEC’s claims lack essential elements and go beyond the Commission’s authority. Furthermore, Bittrex wants the case dismissed, stating that the SEC is not adhering to statutory constraints and standards.

“The SEC’s pursuit of Bittrex is particularly misguided because the company has ceased its operations in the US, fully repaid all customers who submitted detailed redemption requests, and filed for bankruptcy. The Commission is therefore pursuing registration-based violations against a company that is no longer operating and has not been accused of fraud,” the company stated.

Bittrex provides three main reasons for requesting the dismissal of the SEC case. First, the company argues that the SEC does not have clear congressional authorization to regulate tokens as securities. Bittrex believes that this decision should be made by Congress, not the SEC or the court.

The second reason for dismissal is that the complaint does not sufficiently allege that any secondary-market transactions conducted by Bittrex involved securities. Lastly, Bittrex accuses the SEC of not adequately specifying the scope of the alleged conduct and failing to provide proper notice of the claims.

Exchange Files for Bankruptcy After SEC Lawsuit

In April, the SEC filed a lawsuit against Bittrex and Shahara, accusing them of operating an unregistered securities exchange, broker, and clearing agency. In a press release, SEC Enforcement Director Gurbir Grewal stated that Bittrex evaded registration requirements and advised crypto securities issuers to do the same. The SEC also claimed that Bittrex combined certain market functions to increase its profits.

In March, the SEC sent Bittrex a Wells Notice, informing the exchange of the impending charges. Shortly thereafter, Bittrex announced the suspension of its US operations due to regulatory uncertainty. By May, Bittrex filed for Chapter 11 bankruptcy in Delaware. The bankruptcy filing only affects Bittrex US and not its global parent company. Bittrex had been facing operational difficulties and had laid off 80 staff members in February.

Bittrex’s Motion to Dismiss Similar to Coinbase

Last week, Coinbase issued its first legal response to the SEC following the Commission’s lawsuit in early June. In its response, Coinbase requested that the court dismiss the case, arguing that the lawsuit violates its due process rights and constitutes an abuse of process.

Like Bittrex’s recent motion to dismiss, Coinbase argued that the SEC lawsuit falls outside of its jurisdiction. The exchange supported its argument by referencing a filing in which SEC Chair Gary Gensler told Congress that the Commission lacks statutory authority to regulate Coinbase and similar businesses. According to the filing, Gensler also stated that only Congress can address the regulatory gap.

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