Defunct cryptocurrency exchange Bittrex is asking a federal judge to throw out its $24 million settlement with the Securities and Exchange Commission, demanding a full refund based on the regulator's dramatic shift in crypto enforcement.
In a motion filed this week, Bittrex’s attorneys argued it would be fair for the former exchange to benefit from the SEC's recent change of heart on crypto regulation. “Two-and-a-half years after extracting a settlement from a bankrupt cryptocurrency exchange premised on the legal theory that the tokens that traded on the exchange were securities, the SEC has (a) conceded that its legal theory was wrong and those tokens were not securities, (b) acknowledged that its enforcement strategy was misguided from the start, and (c) dropped every similar case and investigation except this one,” the filing stated.
The original settlement in 2023 resolved a lawsuit from the Biden-era SEC, which accused Bittrex of offering illegally unregistered securities. The Seattle-based exchange, which also paid a $29 million penalty to the Treasury Department for sanctions violations, ultimately ceased operations, citing an unviable U.S. regulatory environment. However, since President Donald Trump’s return to power, the SEC has dropped numerous lawsuits against crypto firms like Coinbase and Ripple and has signaled a more constructive approach.
This case could set a major precedent for the crypto industry. A successful motion by Bittrex might inspire a wave of similar challenges from other crypto companies that settled with the SEC under its previous leadership. The filing notes that the SEC moved in March to forfeit the $24 million to the Treasury for distribution to harmed customers, a move Bittrex is now racing to prevent.
The regulatory environment for digital assets in the U.S. has changed significantly. Speaking at the Consensus conference, Nasdaq President Tal Cohen described the SEC as “much more constructive,” a sentiment that gives firms room to “build” and “experiment” with tokenization and blockchain infrastructure. This contrasts sharply with the enforcement-heavy approach that led to Bittrex’s shutdown.
The shift is part of a broader political realignment on crypto, though regulatory clarity remains a work in progress. U.S. Senator Kirsten Gillibrand has insisted that the pending Digital Asset Market Clarity Act must include an ethics provision banning senior government officials from personal interests in the industry. This highlights the ongoing tension and high stakes as Washington attempts to finalize a regulatory framework, with a potential vote on the bill coming as soon as August. An SEC spokesperson declined to comment on the Bittrex case.
This article is for informational purposes only and does not constitute investment advice.
