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SEC asked Coinbase to trade only in bitcoin before suing crypto exchange -FT

Published 07/31/2023, 12:15 AM
Updated 07/31/2023, 08:01 AM
© Reuters. FILE PHOTO: A smartphone with displayed Coinbase logo and representation of cryptocurrencies are placed on a keyboard in this illustration taken, June 8, 2023. REUTERS/Dado Ruvic/Illustration

(Reuters) - The U.S. Securities and Exchange Commission (SEC) had asked Coinbase (NASDAQ:COIN) to stop trading in all cryptocurrencies except bitcoin before suing the cryptocurrency platform in June, the Financial Times reported on Monday, citing CEO Brian Armstrong.

"We really didn't have a choice at that point. Delisting every asset other than bitcoin, which by the way is not what the law says, would have essentially meant the end of the crypto industry in the U.S.," Armstrong told the FT.

"It kind of made it an easy choice ...  let's go to court and find out what the court says," he added.

The SEC had accused Coinbase of operating illegally because it failed to register as an exchange. It also alleged that Coinbase traded at least 13 crypto assets that are securities that should have been registered, including tokens such as Solana, Cardano and Polygon.

The SEC told the FT that its enforcement division did not make formal requests for "companies to delist crypto assets".

"In the course of an investigation, the staff may share its own view as to what conduct may raise questions for the commission under the securities laws," FT said, citing the SEC.

In response to the FT report, a Coinbase spokesperson said the SEC had never shared a position that all assets other than bitcoin were securities, and that staff don't make formal requests such as the one implied by the article without a vote of the full commission.

"We continue our discussions with the Commission, but believe that transparent and fair rulemaking and Congressional action represent the best path forward for American crypto users and the companies building the cryptoeconomy in the US," the spokesperson added.

The regulator sued Binance in June, with both civil cases part of SEC Chair Gary Gensler's push to assert jurisdiction over the crypto industry.

© Reuters. FILE PHOTO: A smartphone with displayed Coinbase logo and representation of cryptocurrencies are placed on a keyboard in this illustration taken, June 8, 2023. REUTERS/Dado Ruvic/Illustration

Gensler has labeled the crypto industry a "Wild West" that has undermined investor trust in the U.S. capital markets. Crypto companies say the SEC rules are unclear, and that the agency is overreaching by trying to regulate them.

The SEC did not immediately respond to a Reuters request for comment on the report.

Latest comments

IRS wants its cut, so it sends in the SEC.
True, but much deeper motives of government establishment and their corporate donors than the taxation goal alone.
Shady but this is an example why bitcoin etf Surveillance sharing agreements proposed by Blackrock and others will fail. Gensler does not even consider coinbase a legitimate exchange
Gensler is a bla kmailing crook
Fits in consistently with team Biden.
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