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 alleged securities law violations.

The SEC had previously accused Bittrex, Shihara, and Bittrex’s foreign affiliate Bittrex Global GmbH of operating an unregistered domestic stock 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, an important question that they argue has not been clearly authorized by Congress.

Furthermore, the motion to dismiss argues that the SEC has not provided sufficient evidence to support its claims that the securities transactions occurred on the Bittrex platform. Defendants contend that the SEC’s allegations require proof that “Investment Contracts” are traded on the platform, a requirement they claim the SEC has failed to meet.

The motion also seeks to dismiss the control person’s liability claim against Shihara, arguing that the SEC has failed to provide fair notice of alleged securities law violations. The case, filed in the United States District Court for the Western District of Washington in Seattle, is scheduled for oral argument on September 8, 2023.

This legal development comes after Bittrex filed for bankruptcy in May 2023, following SEC charges. The Seattle-based company ceased operations in the United States on April 30, 2023, but assured that the bankruptcy filing would not affect Bittrex Global, which serves clients outside the United States.