Cryptocurrency exchange Bittrex has taken a significant step in its legal battle against the United States Securities and Exchange Commission (SEC) by filing a motion to dismiss the case.
Bittrex’s argument centers around the claim that the SEC lacks the authority to regulate cryptocurrencies as securities unless specifically granted by Congress.
By challenging the SEC’s interpretation of existing securities regulations, Bittrex aims to establish a clearer regulatory framework that accommodates digital assets.
In a strategic move reminiscent of Coinbase, Bittrex has closely aligned its arguments with those of the larger cryptocurrency exchange.
This alignment suggests that Bittrex intends to leverage the robust legal framework established by Coinbase and construct a unified defense against the SEC’s lawsuit.
Similar to Coinbase, Bittrex’s legal team highlights what they perceive as deficiencies in the SEC’s allegations concerning the trading of investment contracts.
While both defendants acknowledge that the initial sale of certain crypto assets could be classified as securities contracts, they contend that this classification does not extend to assets traded on secondary markets.
Bittrex argues that once an asset is launched and actively traded on secondary markets, it should no longer be considered a security but rather categorized as a commodity or another class of digital asset.
Furthermore, Bittrex asserts that the SEC did not adequately convey that its actions were prohibited, employing a defense strategy commonly used by cryptocurrency defendants challenging the SEC’s allegations.
The legal dispute between Bittrex and the SEC originated in April when the SEC charged Bittrex and its co-founder, William Shihara, with operating an unregistered national securities exchange.
The complaint alleges that Bittrex facilitated the trading of digital assets that met the securities criteria outlined in U.S. federal securities laws without obtaining SEC registration as an exchange.
Additionally, the SEC charged Bittrex Global, the foreign affiliate of Bittrex, with failing to register as a national securities exchange in the same complaint.
Bittrex’s motion to dismiss represents a pivotal moment in its fight against the SEC.
By challenging the SEC’s authority and aligning its arguments with those of Coinbase, Bittrex aims to establish a more defined regulatory framework that accommodates the unique characteristics of digital assets.
The outcome of this legal battle will likely have significant implications for the cryptocurrency industry as a whole, as it could set a precedent for how cryptocurrencies are regulated in the United States.
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