The U.S. Securities and Exchange Commission (SEC) announced that it has reached a settlement with cryptocurrency trading platform Bittrex and its co-founder and former CEO William Shihara for operating an unregistered exchange.

In an Aug. 10 statement, the SEC said Bittrex and Bittrex Global agreed to pay $14.4 million in ill-gotten gains, $4 million in prejudicial interest, and $5.6 million in civil penalties to resolve a legal dispute with the federal regulator. The deal is still subject to court approval.

“For years, Bittrex has worked with token issuers to ‘purify’ their online filings of any indication that they are investment contracts to evade federal securities laws,” SEC enforcement director Gurbir Grewal said. “Today's agreement makes clear that you cannot avoid liability by changing labels or changing descriptions because it is the economic realities of these proposals that matter.”

The SEC filed a lawsuit in April, alleging that Bittrex and Shihara operated an unregistered national securities exchange, broker and clearing house. The financial regulator also took separate enforcement action against Bittrex Global for “operating a single shared order book together with Bittrex.”

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