Bittrex Moves to Dismiss SEC Lawsuit

The cryptocurrency exchange Bittrex has filed a motion to dismiss a lawsuit against it by the U.S. Securities and Exchange Commission (SEC).

Although Bittrex exited the U.S. market in May, the latest motion suggests that the firm intends to join its peer Coinbase in fighting against the SEC.

Bittrex Seeks to Have SEC Lawsuit Thrown Out

In documents published on Friday, lawyers representing Bittrex and its founder William Shihara argue that the court should throw out an SEC lawsuit alleging that the firm operated an unregistered securities exchange.

Following the SEC complaint against it, Bittrex shuttered its US operation, blaming the regulatory and economic environment in the country.

But although the exchange has declared its U.S. arm bankrupt, Bittrex has refused to roll over and fully accept defeat.

Bittrex could bow out and settle the SEC’s claim. But instead of leaving the matter to the judge in its bankruptcy case, Bittrex has opted to fight another day. 

Crypto Exchanges Defend Against SEC Charges

In the motion to dismiss the case against it, Bittrex makes a number of points that have become familiar in such arguments.

Like a similar motion filed by Coinbase, the document argues that the SEC cannot regulate crypto assets as securities without Congress’ authorization. 

In another similarity, Bittrex lawyers point to what they perceive as holes in the SEC’s claims that it traded investment contracts. Both defendants acknowledge that the initial sale of some crypto assets could be designated securities contracts. But they claim that a similar application doesn’t apply to assets traded on secondary markets. 

Finally, Bittrex states that the SEC failed to provide it with fair notice that its actions were prohibited. As well as Bittrex and Coinbase, the fair notice defense is being used by other high-profile defendants contesting SEC claims against them.

Most notably, Ripple has made the argument a central part of its defense. The company has argued that the SEC never identified which rules it broke before bringing a case against it. Recently, Ripple’s defense has become a model for the many crypto businesses that are battling the Commission in court.

All Eyes on Coinbase Decision 

In its own motion to dismiss an SEC lawsuit against it, Coinbase has made similar points to Bittrex. As such, how the judge, in that case, responds to Coinbase’s arguments will be closely watched by Bittrex lawyers.

This week, the SEC received a three-day extension to file its response to the motion. Taking account of the July 4 holiday weekend, the regulator has until July 7 to respond.

A pretrial conference in which Katherine Mary Polk Failla will rule on the motion is currently scheduled for July 13.