The ongoing legal tussle between the U.S Securities and Exchange Commission (SEC) and the cryptocurrency exchange Bittrex has taken an interesting turn. Bittrex is asserting its defense, following the steps of its peer Coinbase, and has recently filed a motion to dismiss the SEC's case.
Bittrex's argument hinges on its belief that Congress has not explicitly granted the SEC the jurisdiction to oversee cryptocurrencies as securities. Bittrex's position is an open challenge to the SEC's understanding of its own regulations and represents a bid to shape a more concrete regulatory environment for the world of digital assets.
The approach adopted by Bittrex, strikingly similar to Coinbase's defense strategy, underscores a concerted effort to build a common front against the SEC lawsuit. This strategic alignment signifies an intent to leverage the resilient legal foundations laid down by Coinbase.
Both Bittrex and Coinbase have identified what they see as flaws in the SEC's claims pertaining to investment contracts trading. They argue that while some digital assets' initial sale might be viewed as securities contracts, this categorization should not apply to the same assets when traded on secondary markets.
According to their contention, once a digital asset starts trading actively on secondary markets, it ceases to be a security and should be recognized as a commodity or a different class of digital asset.
Further bolstering its defense, Bittrex maintains that the SEC failed to clearly state that its activities were against the rules. This is a familiar defense mechanism employed by cryptocurrency firms battling against SEC's charges.
Earlier this year, Bittrex and its co-founder, William Shihara, were hit with charges by the SEC for operating an unregistered national securities exchange. The SEC alleged that Bittrex had allowed trading of digital assets that fell within the ambit of securities as defined by U.S federal law, without seeking SEC's approval as an exchange.
The SEC's complaint didn't stop at Bittrex, extending to Bittrex Global, its foreign affiliate, for similar charges of not registering as a national securities exchange.