The U.S. Securities and Exchange Commission has filed a lawsuit against Bittrex, naming six tokens listed on the platform as securities. The tokens listed in the complaint are DASH, ALGO, OMG, TKN, NGC, and IHT. The agency alleges that these tokens were offered and sold as securities. Because investors had a “reasonable expectation of profits” from their investment, which qualifies them as securities under U.S. law.
The SEC’s position is that the tokens in question are investment contracts. This means they meet the definition of security under the Howey Test. Moreover, the Howey Test is a legal framework used to determine whether an asset is a security or not. Notably, based on whether investors are expecting to make a profit from the efforts of others.
The SEC alleges that Bittrex facilitated the sale of these unregistered securities to US investors, in violation of US securities laws. The SEC is seeking disgorgement of ill-gotten gains, civil penalties, and permanent injunctions against Bittrex.
SEC in watch on cryptocurrency
This is not the first time that the SEC has taken action against a cryptocurrency exchange for facilitating the sale of unregistered securities. In recent years, the SEC has taken a more active role in regulating the cryptocurrency industry. And has issued numerous warnings to investors and companies about the risks associated with cryptocurrencies and initial coin offerings (ICOs).
It is important for companies and individuals operating in the cryptocurrency industry to understand the regulatory landscape and comply with applicable laws and regulations. Failure to do so can result in significant legal and financial consequences.
