Bankrupt cryptocurrency exchange Bittrex asked a U.S. federal court this week to vacate its $24 million settlement with the Securities and Exchange Commission (SEC), arguing that the regulator no longer stands by the legal theory that underpinned the case — that most crypto tokens are securities.
SEC Reversal Fueling Bittrex's Motion
In a filing submitted Monday, Bittrex’s attorneys said the SEC under President Donald Trump has “conceded that its legal theory was wrong and those tokens were not securities, acknowledged that its enforcement strategy was misguided from the start, and dropped every similar case and investigation except this one.” The exchange claims enforcing the settlement while abandoning parallel actions amounts to unfair treatment.
The settlement originated from a lawsuit filed during the Biden era, accusing the Seattle-based exchange of offering unregistered securities through crypto token trading. Bittrex paid $24 million in 2023 without admitting or denying the allegations. But under Trump, SEC leadership has retreated from aggressive crypto enforcement, dismissing or pausing several high-profile lawsuits, with top officials stating that most digital assets fall outside securities laws.
Dispute Over $24M Fund Transfer
Court records also show the SEC sought permission in March to transfer the $24 million to the U.S. Treasury Department for distribution to former Bittrex customers who allegedly suffered losses. Bittrex’s legal team asked the judge to halt the transfer and order the SEC to return the funds before any distribution.
Bittrex shut down operations shortly after the settlement, citing an “economically viable” business environment. Separately in 2022, it agreed to pay about $29 million to the Treasury Department to settle alleged sanctions violations involving Iran, Cuba, and Syria, as well as anti-money laundering rule breaches.
The court has yet to rule on Bittrex’s motion.