In an exclusive interview with the Financial Times, Brian Armstrong, Coinbase CEO, disclosed that the U.S. Securities and Exchange Commission (SEC) made an extraordinary request for the suspension of trading in all cryptocurrencies, with the exception of bitcoin, prior to taking legal action against the company.
Armstrong stated that the SEC’s insistence on delisting all assets other than bitcoin was the prelude to the lawsuit. Coinbase, with over 200 tokens on its platform, found itself in the crosshairs of the SEC. It was accused of violating securities laws and enabling unregistered trading in 12 digital tokens that were classified as securities.
According to Armstrong, the SEC communicated their stance by claiming that all assets apart from bitcoin were considered securities. Coinbase expressed their disagreement, seeking an explanation for the decision, but the SEC chose not to provide one.
Coinbase CEO Disagrees With SEC`s stance on Assets
Amid the legal battle, Coinbase moved to dismiss the SEC’s lawsuit. They argued that the agency was interpreting securities laws in ways that deviated significantly from established legal frameworks. Coinbase’s chief legal officer, Paul Grewal, took to Twitter to assert that the SEC’s claims went beyond the existing law.
However, the SEC countered by asserting that Coinbase was aware of its violation of securities laws. In a court filing, the SEC’s lawyers emphasized that Coinbase, as a multi-billion-dollar entity guided by experienced legal counsel, knew the risks posed by its conduct in relation to federal securities laws.
They also highlighted that Coinbase’s registration statement in 2021 had not been approved. Thus, confirming the legality of the company’s underlying business activities at the time and beyond. However, Coinbase remains confident in the legality of its offerings, ready to seek clarity and fairness through a legal process.
The SEC’s actions did not end with Coinbase. They also initiated legal action against Binance, and its founder CZ, citing multiple alleged violations of U.S. securities laws.
This clash between regulators and the cryptocurrency industry continues to unfold raising pertinent questions about the ever-evolving legal landscape surrounding digital assets. As the courtroom drama intensifies, the implications for the cryptocurrency market at large remain uncertain.
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