Bittrex Joins Coinbase and Other Crypto Giants in Fight Against the SEC
In April of this year, Bittrex and its co-founder/CEO William Shihara were charged by the SEC for operating an unregistered national securities exchange, broker and clearing agency.
A separate charge was also filed against Bittrex Global. This filing was a little bit before all of the other actions taken against exchanges like Coinbase and Binance, but the SEC moved in lock step as it went after all of these crypto giants.
Bittrex is not quite as large as Coinbase and Binance. Notably, their legal team is far from as sophisticated as Coinbase.
Coinbase is leading the charge in building a narrative against the SEC's actions against them. Whether or not that narrative is correct - and I think most of us in this space believe it to be correct - the general theme is that the SEC is performing an enforcment-first approach to this industry.
There seems to be bad blood and a general distaste for crypto by the SEC and its current leader; Gary Gensler.
Bittrex has been thrown into the cross-hairs and has been winding down their operations in the US for a few months now.
Today, they filed a motion to dismiss the case that the SEC has thrown against them. They are generally stating that the SEC doesn't have the authority to regulate cryptocurrencies as securities unless congress specifically greenlights it.
This is a similar narrative to what Coinbase is stating as well.
Coinbase has also been publicly stating for months now that they have tried to work with the SEC to establish a more defined and clear regulatory framework for digital assets.
Coinbase and Brian Armstrong have said numerous times that the SEC was silent and unwilling to work with them despite their best efforts.
Bittrex, Coinbase, Binance and others should all adopt the same narrative - in my opinion - and challenge the SEC on their actions.
It's not clear if they would win, but numbers would help. It's good to move in coordination with each other on this issue.
Are Digital Assets Securities by Default?
Bittrex, Coinbase and others are making a case that once assets are actively traded on secondary markets, they should not be considered securities but categorized differently and on top of that, the SEC did not give clear guidelines on what is and isn't allowed.
Instead these exchanges were allowed to operate and build for years with no interventions by the SEC except a retroactive case being built against them.
"They argue 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."
This is an interesting argument from Bittrex, one that I find particularly fascinating.
Are all digital assets securities?
The SEC has been pretty clear that BTC is not a security. They have been somewhat silent on ETH but most believe that the SEC is deeming it not a security as well.
So it seems that there is an interesting "loophole" here - so to speak.
If a digital asset is launched fairly with no presales, premines or insider exclusivity, then is it not a security?
Further, if a digital asset is simply deployed with basic, open and fair mining procedures, is NOT sold privately to any investors and is also then traded on the secondary market by users, is it NOT a security?
Bringing Hive into this context - HIVE is a fork of STEEM. There is no premine, investor sale or even centralized company with team stake.
Is HIVE not a security because it is fairly mined by the users through Proof of Brain?
All interesting questions. Aligning with Bittrex and Coinbase would tell us that if the trading is all secondary market and there is no exclusive launch / pre-sale / ICO, etc. then it is NOT a security but rather a commodity.
What are your thoughts on Bittrex and also this broader issue of securities and the secondary market? Leave a comment below!
About LeoFinance
LeoFinance is a blockchain-based Web3 community that builds innovative applications on the Hive, BSC, ETH and Polygon blockchains. Our flagship application: LeoFinance.io allows users and creators to engage & share micro and long-form content on the blockchain while earning cryptocurrency rewards.
Our mission is to democratize financial knowledge and access with Web3.
Twitter: https://twitter.com/FinanceLeo
Discord: https://discord.gg/E4jePHe
Whitepaper: https://whitepaper.leofinance.io
Our Hive Applications
Join Web3: https://leofinance.io/
Microblog on Hive: https://leofinance.io/threads
Delegate HIVE POWER: Earn 16% APR, Paid Daily. Currently @ 2.8M HP
Hivestats: https://hivestats.io
LeoDex: https://leodex.io
LeoFi: https://leofi.io
BSC HBD (bHBD): https://wleo.io/hbd-bsc/
BSC HIVE (bHIVE): https://wleo.io/hive-bsc/
Earn 50%+ APR on HIVE/HBD: https://cubdefi.com/farms
Web3 & DeFi
Web3 is about more than social media. It encompasses a personal revolution in financial awareness and data ownership. We've merged the two with our Social Apps and our DeFi Apps:
CubFinance (BSC): https://cubdefi.com
PolyCUB (Polygon): https://polycub.com
Multi-Token Bridge (Bridge HIVE, HBD, LEO): https://wleo.io
Posted Using LeoFinance Alpha
As an European I do not understand the exact legal meaning of security/commodity etc but it looks like the US is again bullying something they do not like or understand starting with two companies they found closeby.
We brag about being free, but financially speaking, Americans are the least free people on the planet. Our government wants complete control of every penny spent anywhere.
Posted Using LeoFinance Alpha
Our heavily controlled financial system does seem to be a contrast to our songs and pledge for liberty.
Posted Using LeoFinance Alpha
The only way this could be a sucess, is if these companies including binance turn themselves into a DAO collective.
I can certainly see some advantages to being a faceless DAO.
Posted Using LeoFinance Alpha
Or they could collaborate with nation3...
Who is nation3?
Posted Using LeoFinance Alpha
I am particularly interested in these determinations, as so sold we all. You did a very discussion of the issues, and in particular two big points: c
First issue being regulatory reach or over-reach. I personally think this is a very good arguement to bring up, since the SEC seems to hold all the cards, if, you agree that they have the right to regulate crypto assets. But if you can make that certainty uncertain we have a whole new ball game. As a potential cryptocurrency entrepeneur this issue is key in what licenses I need to operate legally in this space.
Second issue is classification of tokens as security tokens or utility tokens being an issue, and I would love to hear your thoughts about utility tokens versus security tokens? I have been studying the definitions and while one exchange (Prometheium) has secured the three licenses to custody digital assest, broker dealer digital assest, tbroker dealer securities, there are no approved digital assets for them to custody, broker or sell. So they are fully licensed for a market that doesn't exist.
My opinion: There should be regulations in place. Too many Ponzi schemes have already stolen a significant amount of people's money, tarnishing the reputation of cryptocurrencies. However, there should not be an excessive regulation that renders crypto useless. While the SEC may seem to protect the average person, it is known that influential players may prefer the destruction of crypto - according to conspiracy theories. I believe that many cryptocurrencies are securities and should be regulated accordingly, especially those created with the intention of deceiving people. Fraudulent projects must be eliminated and measures should be taken to prevent the emergence of new ones. Legitimate cryptocurrencies should be given the necessary space to flourish and create value.