It turns out that another Wells notice has been served to another web3-focused company, by none other than the US Securities and Exchange Commission.
According to reports, the SEC has informed Bittrex of a prospective enforcement action, on grounds that the company operated without SEC registration as an exchange, broker-dealer, and clearinghouse for securities.
According to Bittrex corporate counsel David Maria, the enforcement unit warned Bittrex about probable legal action from the SEC in March.
And because of this, the Seattle-based cryptocurrency company had already begun to wind down its U.S. operations by the time the notice was served.
The SEC and Bittrex discussed how to register their business in late 2022, according to Bittrex's general counsel. The crypto exchange discovered that there was no way to abide by the SEC's regulations without basically ending all of its revenue-generating operations in the nation, explaining the gradual wrap-up of its operations in the US.
Attorney Maria emphasized that Bittrex's inability to adhere to SEC standards was caused by the agency's initial failure to establish clear regulations for cryptocurrencies.
Attorney David Maria explained that since Bittrex is ceasing operations in the US, it is unsure if the SEC will go through with the lawsuit.
Unless regulators "come with a reasonable settlement offer," the attorney allegedly stated, "Bittrex will go to court if the agency decides to take action".
The information was released shortly after Bittrex declared that all operations will cease in the United States on March 31 due to the difficult legal and economic climate. Customers in the US were instructed by the exchange to remove their funds before April 30, 2023.
Bittrex had had various problems before eventually deciding to leave the country.
For example, the crypto exchange agreed to pay more than $29 million in fines from the Office of Foreign Assets Control and Financial Crimes Enforcement Network of the U.S. Department of the Treasury in 2022.
This settlement concerned sanctions breaches that occurred between 2014 and 2017 in the Crimean Peninsula, Cuba, Iran, Sudan, and Syria.
According to John Reed Stark, a former SEC attorney, Coinbase may be next for an SEC lawsuit. Keep in mind that a Wells Notification was also delivered to the crypto exchange last month.
Nevertheless, there have been complaints about the unclear regulations from these agencies, and how they go after companies and individuals without proper warning.
Companies like Ripple Labs, Binance, Bittrex and many others have been hounded by these agencies, and the question remains: Why are these unclear regulations bad for the entire sector?
For one, the recent instability in the cryptocurrency markets is a result of the regulators' ineffective performance of their duties and not crypto itself.
It is true that like traditional banks, cryptocurrency lenders like Celsius, and exchanges like FTX should also have been regulated more firmly before they imploded.
But, imposing too many rules on the cryptocurrency sector is likely to increase the danger, not decrease it.
Blockchain-based decentralized protocols are already more secure and open than the majority of regulated financial institutions and senselessly going after companies striving to make this happen might be a mistake after all.
Consumers are significantly better protected by clear and open information exchanged on the blockchain, than by bureaucratic authorities who may or may not even be doing their duties.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.