A motion to dismiss the case has been filed on behalf of Bittrex and its co-founder, William Hiroaki Shihara. The motion, filed on July 2, 2023, argues that the SEC lacks the authority to regulate crypto assets as securities and that the Commission has failed to provide adequate notice of the alleged securities law violations.
The SEC had previously charged Bittrex, Shihara, and Bittrex’s foreign affiliate, Bittrex Global GmbH, with operating an unregistered national securities exchange, broker, and clearing agency. This followed a six-year investigation into the company’s operations. However, the defendants are now challenging the SEC’s authority to regulate crypto assets as securities, a major question that they argue Congress has not clearly authorized.
Furthermore, the motion to dismiss argues that the SEC has not provided sufficient evidence to support its claims that securities transactions occurred on the Bittrex platform. The defendants contend that the SEC’s allegations require proof of “Investment Contracts” being traded on the platform, a requirement they claim the SEC has failed to meet.
The motion also seeks to dismiss the control person liability claim against Shihara, arguing that the SEC has failed to provide fair notice of the alleged securities law violations. The case, filed in the United States District Court for the Western District of Washington at Seattle, is scheduled for oral argument on September 8, 2023.
This legal development comes after Bittrex filed for bankruptcy protection in May 2023, following the SEC’s charges. The Seattle-based company ceased operations in the United States on April 30, 2023, but assured that the bankruptcy filing would not impact Bittrex Global, which serves customers outside the United States.