Bittrex mimics Coinbase, argues SEC lacks authority to apply securities laws to crypto

Bittrex says the SEC lacks “clear congressional authorization” required to apply securities laws to tokens

article-image

Sharaf Maksumov/Shuttertock modified by Blockworks

share

Bittrex is seeking to dismiss SEC charges alleging that the now-shuttered exchange listed unregistered securities on its platform. 

“The SEC lacks the ‘clear congressional authorization’ required to apply the securities laws to tokens,” Bittrex argued.

Earlier this year, Bittrex US shut down its operations and filed for bankruptcy following a lawsuit from the US regulator.

Oliver Linch, CEO of Bittrex Global — which operates as a separate company from Bittrex US, and was also targeted by the SEC — previously told Blockworks that Bittrex “never got a chance to respond.”

The former exchange claims that the SEC filed its complaint — following a six-year investigation — while it was winding down US operations, stating that Bittrex had operated as an unregistered securities exchange, broker-dealer and clearing agency. 

“The Commission is still missing essential elements of its claims. And those claims exceed its authority and defy key securities-laws precedents. This is inexcusable. When the government brings an enforcement action, especially after a prolonged investigation, it should adhere rigorously to the pleading standards and relevant statutory constraints. The SEC failed to do so here,” Bittrex said in its filing. 

Bittrex’s argument is very similar to the one Coinbase used last week in response to its lawsuit from the regulator.

Coinbase claimed that only Congress can decide how to regulate crypto and agencies such as the SEC “may not seize power for themselves.”

In its complaint against Bittrex, the SEC alleged that six tokens fall under the current definition of investment contracts. 

Bittrex pushed back against the claim, saying that there is a legal precedent of courts deciding that some tokens did constitute investment contracts. The cases that they say set these precedents involved the offering’s developers and not the platforms that made the tokens available through secondary market trading “with zero contractual or other connection between the token purchaser and token developer.” 

Bittrex argues that the distinction is “critical” because the allegations are focused on the transactions “by which the tokens were first issued by the developer” and not the “subsequent transactions” on Bittrex US.

In another similarity to Coinbase, Bittrex also argued the lack of clarity on which tokens constitute a security in the SEC’s eyes. 

The SEC’s regulation through enforcement leaves Bittrex — and other crypto companies — in limbo as they try to “guess” which tokens might be considered securities. Bittrex notes that this was specifically painful because of the number of tokens that were listed on its platform. It says that “participants in the crypto industry and many others beyond have pleaded with the SEC to provide some measure of clarity about this issue.”

Both CFTC Chair Rostin Behnam and former SEC Chair Jay Clayton have taken aim at regulation by enforcement, with Behnam saying it’s unsustainable.  

“The Commission’s apparently strategic decision to provide no meaningful public guidance about which tokens are subject to regulation as securities—particularly in secondary-market transactions—before mounting enforcement actions against supposed violators amounts to a denial of due process,” lawyers for the former exchange claim.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 24 - 26, 2026

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Unlocked by Template (1).jpg

Research

As AI supercharges surveillance, privacy becomes a prerequisite and the winning stack will combine confidentiality with selective disclosure. Zcash’s Tachyon, composable standards on Ethereum/Solana, and compliance-aware pools aim to make private rails the new norm.

article-image

Bain Capital Crypto and Haun Ventures co-led the round as demand grows for Bitcoin-denominated savings and annuities

by Blockworks /
article-image

NYSE owner’s investment values the prediction market at $8–9 billion, signaling Wall Street’s entry into event-based trading

by Blockworks /
article-image

Pineapple begins deploying its $100 million Injective Digital Asset Treasury, staking INJ to earn yield and fund onchain mortgage ambitions

by Blockworks /
article-image

Staking levels in the ether funds will depend on protocol unstaking queue times and anticipated redemption activity, firm says

article-image

ETF inflows, miner strength, and tightening supply drive Bitcoin past its prior peak amid renewed demand for scarce assets

by Blockworks /
article-image

The Guidestar team, led by Alex Nezlobin, will join Uniswap Labs to enhance automated market maker design and smart order routing

by Blockworks /