The United States Securities and Exchange Commission (SEC) has categorized six cryptocurrency tokens as securities in its lawsuit against Bittrex. According to the classification of the regulator, OMG Network (OMG), Dash (DASH), Monolith (TKN), Naga (NGC), Real Estate Protocol (IHT), and Algorand (ALGO) are securities.
At the same time, the SEC has hinted that there may be more as the list is ‘non-exhaustive’.
Allegedly, the cryptocurrency exchange was having a “reasonable expectation of profits,” hence, the classification. Bittrex was first indicted by the SEC for operating its platform as a national securities exchange, broker and clearing agency without registering with the regulator.
Per a statement by the SEC, this is a violation of federal laws as it Is required of any exchange that wishes to offer securities to its customers to register with the appropriate authority. The former Chief Executive Officer (CEO) and Co-Founder of Bittrex Bill Shihara and Bittrex Global GmbH are also facing charges.
Both entities were accused of collaborating with token issuers who intended that their crypto assets be listed to “first delete from public channels certain ‘problematic statements’ that Shihara believed would lead a regulator, such as the SEC, to investigate the crypto asset as the offering of a security.”
“As laid out in our complaint, Bittrex’s business model was based on three things: circumventing the registration requirements of the federal securities laws; counseling issuers of crypto asset securities to do the same by altering their offering materials; and combining multiple market intermediary functions under one roof to maximize profits,” SEC Enforcement Director Gurbir Grewal said.
SEC Chairman Says BTC is not Security
This latest development in the lawsuit of Bittrex does not come as a surprise as SEC Chairman Gary Gensler has already classified all crypto assets, except, Bitcoin (BTC) as securities. Binance USD issuer Paxos recently had an argument with the SEC over the categorization of the stablecoin. The regulator regarded BUSD as unregistered securities, therefore, implying that Paxos had violated customer protection laws.
Noteworthy, the crackdown on cryptocurrency exchange in terms of what is regarded as securities has intensified. It doesn’t seem like the SEC would be relenting on its efforts anytime soon.
“I think there is one agency — the Securities and Exchange Commission, overseen by two committees — the House Financial Services and Senate Banking, and the courts that define what a security is and not individual crypto exchanges selecting that,” the SEC Chair Gensler said
