The SEC is finally starting to get its act together and deciding what assets can be classed as securities. But it's coming to that decision very late. For example Bittrex, according to the SEC, "has held itself out as a platform that facilitated buying and selling of crypto assets that the SEC’s complaint alleges were offered and sold as securities" "since at least 2014" (does that mean 2014 or before? It's not clear.)

Bittrex may or may not have been profitable: the SEC concentrates on "revenue" not on returns. For the years 2017 to 2022 revenue amounted to some USD1,400 million. This, says the SEC, came from "among other things, transaction fees from investors, including U.S. investors, while servicing them as a broker, exchange, and clearing agency without registering any of these activities with the Commission."

William Shihara, the former CEO of BIttrex is subject to similar allegations, without the vast revenue, obviously. But his involvement, says the Commission was underhand to say the least.

"coordinated with issuers who sought to have their crypto asset made available for trading on Bittrex’s platform to first delete from public channels certain “problematic statements” that Shihara believed would lead a regulator, such as the SEC, to investigate the crypto asset as the offering of a security. For example, in an effort to avoid regulatory scrutiny, before Bittrex would make an asset available on its platform, Bittrex and Shihara instructed issuer-applicants to delete statements related to “price prediction[s],” “expectation of profit,” and other “investment related terms.”"

The SEC’s complaint, filed in the U.S. District Court for the Western District of Washington, alleges that Bittrex and Bittrex Global should have registered as an exchange because they brought together, using a shared order book, the orders for securities of multiple buyers and sellers using established, non-discretionary methods under which such orders interacted, and the buyers and sellers entering such orders agreed to the terms of a trade.

"The complaint further alleges that Bittrex should have registered as a clearing agency because it acted as an intermediary in making payments and deliveries upon matching sell and buy orders and maintained custody of customer assets. Finally, the complaint alleges that Bittrex should have registered as a broker because it regularly engaged in the business of effecting transactions for the accounts of others in crypto assets that were offered and sold as securities."

This newspaper has no argument with the principle but only with the fact that the Commission took so long to decide what was, and what was not, registrable while US government policy appeared to grant near-carte blanche to fintech etc. companies in order to develop market share, leading to a general feeling that regulation was optional. Bittrex is far from the only company which is finding that decisions that affect the future of otherwise successful companies are being made in retrospect.

True, many prudent advisers would have warned that the greater likelihood was that when the Commission decided where to draw the line that it would include many crypto-assets as securities while other regulators tried to downplay their relevance. After all, it took the Bank for International Settlements several years to decide that such things should be referred to as "crypto-assets" not "crypto-currencies."

Companies such as Bittrex were operating in an environment of considerable uncertainty and flexibility. That regulators, worldwide, failed to create a stable and predictable environment is not their fault, said Nigel Morris-Cotterill, a financial crime strategist and ultimate owner of World Money Laundering Report.