The United States Securities and Exchange Commission (SEC) has announced an agreement with crypto trading platform Bittrex and co-founder and former CEO William Shihara for operating an unregistered exchange.

In an Aug. 10 notice, the SEC said Bittrex and Bittrex Global agreed to pay $14.4 million in disgorgement, $4 million in prejudgment interest, and $5.6 million in civil penalties to settle the legal dispute with the federal regulator. The agreement is still subject to court approval.

“For years, Bittrex worked with token issuers to ‘scrub’ their online statements of any indicia that they were investment contracts — all in an effort to evade the federal securities laws,” said SEC enforcement director Gurbir Grewal. “Today’s settlement makes clear that you cannot escape liability by simply changing labels or altering descriptions because what matters is the economic realities of those offerings.”

In a statement provided to Cointelegraph, Shihara called the settlement a “good outcome”, adding the United States needed to “[strike] a balance between fostering innovation, encouraging entrepreneurs and the need to protect consumers”. Shihara was the CEO of Bittrex from its founding in 2014 to his departure in 2019.

The SEC’s complaint filed in April claimed Bittrex and Shihara operated an unregistered national securities exchange, broker, and clearing agency. The financial regulator also filed a separate enforcement action against Bittrex Global for “its operation of a single shared order book along with Bittrex”.

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The U.S. Department of the Treasury’s Office of Foreign Assets Control and Financial Crimes Enforcement Network took enforcement actions against Bittrex in October 2022, resulting in the firm agreeing to a $29-million settlement. The exchange announced in March it was planning to shut down operations in the United States in April — claiming the move was due to the country’s regulatory environment — and filed for Chapter 11 bankruptcy in May.

As of Aug. 10, the SEC has legal cases pending against crypto firms including Binance, Coinbase, Ripple Labs and Terraform Labs. Many U.S. lawmakers and industry leaders have criticized the agency for taking a “regulation by enforcement” approach to crypto.

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