Cryptocurrency exchange Bittrex has filed a motion to dismiss its legal dispute with the United States Securities and Exchange Commission (SEC).
In his recent court presentation, Bittrex argues that the SEC does not have the authority to regulate cryptocurrencies as securities unless explicitly granted by Congress. This statement challenges the SEC's interpretation of existing securities regulations and seeks to establish a more defined regulatory framework that accommodates digital assets.
In its motion to dismiss, Bittrex has took a similar approach to Coinbase, aligning their arguments closely with those made by the largest cryptocurrency exchange. This alignment signals a strategic move by Bittrex to capitalize on the strong legal framework established by Coinbase and build a unified defense against the SEC lawsuit.
Like Coinbase, Bittrex's legal team identifies what it perceives to be deficiencies in the SEC's allegations regarding investment contract trading. While both defendants acknowledge that the initial sale of certain crypto assets could be classified as securities contracts, they contend that the same classification does not extend to assets traded on secondary markets.
They argue that once an asset is launched and actively traded on secondary markets, it should no longer be considered a security, but rather classified as a commodity or other digital asset class.
Furthermore, Bittrex maintains that the SEC failed to adequately communicate that its actions were prohibited, emphasizing a defense strategy commonly employed by crypto defendants who dispute SEC allegations.
Related: Bittrex withdrawals to resume after bankruptcy court gives green light
In April, the SEC accused Bittrex and its co-founder, William Shihara, with the management of an unregistered national stock exchange. According to the complaint, Bittrex allowed the trading of digital assets that met the criteria for securities outlined in the US federal securities laws without obtaining SEC registration as an exchange.
In the same complaint, the SEC also accused Bittrex Global, Bittrex's foreign affiliate, of failing to register as a national stock exchange.
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