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Friday, July 19, 2024

Bittrex Mirrors Coinbase, Requests SEC Lawsuit Dismissal

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Last week, Coinbase filed to dismiss the charges brought against it by the SEC. Motivating its approach, the exchange accused the agency of overreach, stating that crypto assets may not even come under their purview.

The leading US crypto exchange also accused the SEC of ignoring prior approvals given for the sale of some of the digital assets named in its lawsuit.

Emboldened by Coinbase’s move, Bittrex has decided to follow suit.

Lawsuits and Bankruptcies

Although Bittrex is also in court due to bankruptcy procedures, the motion filing for dismissal of charges pertains to a different lawsuit, filed shortly after the company decided to leave America behind. At that point, it had already been under investigation since 2017 and had been in fruitless talks with the SEC since 2022.

In the end, a Wells notice, followed by a full-blown lawsuit, was filed against Bittrex for listing unregistered securities. However, the firm has now hit back at the SEC, stating that the crypto assets they were sued over are not securities at all.


Publicly Traded Crypto Assets Misclassified as Securities

According to court documents, Bittrex argued that although crypto assets may be considered securities when they launch, they change their status once they are traded on secondary markets. As such, these crypto assets should be classified as commodities.

“Tokens are not a new kind of security; they are different in kind from anything the Commission has ever considered a security. They bear far more resemblance to commodities or property than to the “investments” that were the focus of “Congress’ purpose in enacting the securities laws.”

Furthermore, Bittrex’s legal team argued that even if the court were to find that said crypto assets do, in fact, qualify as securities, the SEC has no right to attempt to regulate them since US Congress has not authorized the agency to do so.

Bittrex’s legal team has likened the SEC trying to control crypto assets to the FDA’s attempt to control tobacco or the EPA’s experiment to regulate greenhouse gases, both considered as government agency overreach.

In closing, Bittrex’s legal counsel also pointed to a 2021 declaration by Gary Gensler himself, in which he admitted to Congress that the SEC has no legal framework for cryptocurrencies.

Whether Coinbase and Bittrex will have any success with these attempts is up for debate – nevertheless, they are clearly indicative of the growing frustration with spur-of-the-moment regulation attempts from the SEC, who seem to prefer lawsuits over good-faith attempts at breaching the gap with crypto platforms.

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