In a surprising revelation, Coinbase CEO Brian Armstrong has disclosed that the U.S. Securities and Exchange Commission (SEC) had urged the crypto exchange to halt trading in all cryptocurrencies, except Bitcoin, before initiating legal action against the company.
According to a CoinDesk article published earlier today, Armstrong’s disclosure, made in an interview with the Financial Times (FT), sheds light on the SEC’s stance towards cryptocurrencies other than Bitcoin. According to Armstrong, the SEC’s recommendation left Coinbase with no other option but to seek legal recourse.
The Coinbae CEO apparently told FT:
“They came back to us, and they said . . . we believe every asset other than bitcoin is a security … And, we said, well how are you coming to that conclusion, because that’s not our interpretation of the law. And they said, we’re not going to explain it to you, you need to delist every asset other than bitcoin.”
As CryptoGlobe reported last month, the U.S. Securities and Exchange Commission (SEC) charged Coinbase, Inc., a leading crypto asset trading platform, with operating as an unregistered national securities exchange, broker, and clearing agency. The SEC also accused Coinbase of failing to register the offer and sale of its crypto asset staking-as-a-service program, according to the SEC’s press release.
The SEC alleges that since 2019, Coinbase has unlawfully facilitated the buying and selling of crypto asset securities, intertwining the traditional services of an exchange, broker, and clearing agency without proper registration. The SEC further claims that Coinbase’s failure to register has deprived investors of significant protections, including SEC inspection, recordkeeping requirements, and safeguards against conflicts of interest.
Armstrong’s revelations suggest that the SEC viewed Ether )ETH), the second-largest cryptocurrency, as a security before suing Coinbase. This stance is in line with SEC Chair Gary Gensler’s previous suggestions that all cryptocurrencies other than Bitcoin are securities. However, it’s important to note that the views of Gensler, the four SEC commissioners, and SEC staff do not necessarily reflect the institution’s official position unless explicitly stated as such.
Important Update at 9:55 a.m. UTC on 1 August 2023
According to a report by Cointelegraph, “Coinbase has denied a report saying its CEO Brian Armstrong said it was once told by the United States securities regulator to delist all cryptocurrencies on its platform except for Bitcoin.” Apparently, “a Coinbase spokesperson told Cointelegraph … that the FT report omits context regarding its conversations with the SEC and was inaccurate.”