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Coinbase CEO Brian Armstrong Stands Firm Amid SEC Legal Dispute

Amid a legal battle with the Securities and Exchange Commission (SEC), Coinbase's CEO has voiced out assurances of financial safety to its users.

Brian Armstrong

SEC Lawsuit & Coinbase's Stance

On Wednesday, Coinbase's CEO, Brian Armstrong, confidently countered SEC Chair's lawsuit against the crypto exchange. He described the SEC's head as an "outlier" while ensuring users that their funds remained secure. The SEC had accused Coinbase of trading 13 crypto assets, including Solana, Cardano, and Polygon, which should have been registered. Furthermore, the agency labeled Coinbase as an unregistered broker, exchange, and clearinghouse.

Brian Armstrong's Take on SEC Chair and Crypto Regulations

Armstrong, a vocal critic of the SEC, expressed his frustrations at the Bloomberg conference. Despite the company's efforts to register with the agency, Armstrong described Chair Gary Gensler's response as an "icy reception." He stated that many lawmakers he'd interacted with supported the development of clear regulatory frameworks for cryptocurrencies, contrary to Gensler's stance.

Crypto Market Sentiment and Coinbase Share Performance

Crypto companies, Coinbase included, disagree with the view that crypto tokens are securities and have consistently called for clear SEC rules. Meanwhile, Coinbase's shares managed to bounce back, recording a near 3.1% rise to $53.2 on Wednesday.

Logo of Coinbase
Logo of Coinbase

Binance Entangled in SEC's Crackdown on Crypto Exchanges

In similar news, the SEC also sued Binance, the world's largest crypto exchange, for similar offenses of selling unregistered securities. The agency also alleged that Binance manipulated trading volumes and failed to exclude U.S. customers from its platform.

Coinbase CEO Differentiates Their Case from Binance

However, Armstrong quickly highlighted the distinctions between the two cases, stating to CNBC that the situations "could not be more different." In Coinbase's case, no allegations of misappropriation of customer funds have been made.

Paul Grewal, the company's chief legal officer, spoke with confidence late on Tuesday. He assured that the SEC would not attempt to freeze Coinbase's assets, as it did with Binance. Grewal affirmed that the standards for such an asset seizure didn't apply in Coinbase's situation.

Settlement Talks Between Coinbase and SEC Break Down

Coinbase had disclosed an SEC probe into its asset listing processes, staking programs, and yield-generating products in July. The firm's lawyers had negotiated with the SEC for a potential settlement during the first quarter of this year. However, the discussions fell apart when the SEC clarified that fundamental aspects of the company's business model were essentially illegal.

Logos of Coinbase and SEC
Logos of Coinbase and SEC

Coinbase Advocates for Clearer Crypto-Specific Regulations

Since last year, Coinbase has been urging the SEC to devise new crypto-specific regulations. The company also appealed to the U.S. Court of Appeals for the Third Circuit to force the regulator to respond. The court subsequently ordered the SEC to respond within a week.

Coinbase Still Open to Dialogue with SEC Despite Lawsuit

Despite the ongoing lawsuit, Coinbase expressed interest in continuing a dialogue with the SEC to bring cryptocurrency into the regulatory sphere. Grewal insisted that the company remained dedicated to defending itself in court, regardless of any potential conversation opportunities with the SEC.