Cryptocurrency exchange Bittrex has filed a motion to dismiss in its legal battle with the U.S. Securities and Exchange Commission (SEC). In a recent court filing, Bittrex argues that the SEC only has the authority to regulate cryptocurrencies as securities if Congress explicitly gives the agency that authority.
This contention challenges the SEC’s interpretation of existing securities regulations and is intended to lead to a more defined regulatory framework for digital assets.
In the motion to dismiss, Bittrex took a similar approach to Coinbase. The arguments are also very similar. This same approach suggests that Bittrex is strategically seeking to take advantage of the robust legal framework established by Coinbase. This is also the way to build a unified defence against the SEC’s lawsuit.
As with Coinbase, Bittrex’s legal team sees some loopholes in the SEC’s allegations regarding investment contract trading. While both exchanges acknowledged that the initial sale of specific crypto assets could be classified as securities contracts, they claim that this classification cannot apply to assets traded on secondary markets.
It went on to say that once an asset is brought to market and actively traded on secondary markets, it should no longer be classified as a security but as a commodity or other class of digital asset.
In addition, Bittrex claims that the SEC failed to communicate that such actions are prohibited adequately. This is another defence strategy often used by crypto companies in court against the SEC.
In April, the SEC they filed charges against Bittrex and its co-founder William Shihara for operating an unregistered national securities exchange. The complaint said Bittrex offered trading in digital assets without registering with the SEC as an exchange.
The SEC also accuses Bittrex Global, Bittrex’s foreign subsidiary, of failing to register as a national securities exchange.
