The United States Securities and Exchange Commission (SEC) has reached a settlement of $24 million with cryptocurrency exchange Bittrex and its former CEO, Bill Shihara, following allegations of “scrubbing” charges. The settlement comes after a long and exhaustive investigation by the SEC into the exchange’s practices.
The term “scrubbing” refers to the practice of removing certain orders from the order book in order to create a false impression of liquidity and trading volume. It involves the cancellation of large trades after they have been executed, artificially inflating trading volume and misleading investors.
According to the SEC, Bittrex and Shihara engaged in this deceptive practice on multiple occasions between 2014 and 2019, deceiving investors and users of the platform. The SEC also alleged that Bittrex failed to implement proper compliance measures to prevent market manipulation and protect its customers.
As part of the settlement, Bittrex will pay a civil penalty of $24 million, and Shihara will pay a separate penalty of $1 million. In addition to the monetary penalties, Bittrex has agreed to hire an independent consultant to review and ensure compliance with securities laws.
The settlement reflects the SEC’s increased focus on regulating the cryptocurrency industry and holding crypto companies accountable for their actions. It serves as a reminder to all cryptocurrency exchanges and their executives that they must operate within the confines of the law and provide honest and transparent trading environments for their users.
Since the settlement, Bittrex has made efforts to improve its compliance and regulatory practices. The exchange has strengthened its internal controls and implemented measures to prevent market manipulation and protect investors. It has also enhanced its know-your-customer (KYC) and anti-money laundering (AML) policies to meet industry standards.
This settlement sends a clear message to the crypto industry that market manipulation and deceptive practices will not be tolerated by regulatory authorities. The SEC’s action against Bittrex and its former CEO serves as a warning to other exchanges to ensure compliance with securities laws and implement robust compliance mechanisms.
Investors and users of cryptocurrency exchanges should also take note of this settlement. It highlights the importance of conducting thorough due diligence before trading on any platform and the need for increased regulation to protect investors from fraudulent practices.
In conclusion, the SEC’s settlement with Bittrex and its former CEO, Bill Shihara, for $24 million serves as a significant development in the regulation of the cryptocurrency industry. It underscores the importance of transparency, compliance, and ethical trading practices in the crypto space and sends a strong message to market participants. As the industry continues to evolve, it is crucial for exchanges and their executives to prioritize regulatory compliance and protect the interests of their investors.