SEC vs Coinbase: An Unfolding Drama
The U.S. Securities and Exchange Commission (SEC) allegedly recommended that Coinbase cease trading all cryptocurrencies, excluding Bitcoin, before initiating a lawsuit against the exchange. This information was divulged to the Financial Times by Coinbase CEO, Brian Armstrong, who stated that this left them with no choice but to go to court.
SEC's Response to the Delisting Accusations
Contradicting this narrative, an SEC spokesperson clarified that they do not direct companies to delist crypto assets. The spokesperson suggested that during investigations, the SEC might express views on questionable activities under securities laws, but does not explicitly ask for delisting. It was also noted that opinions within the SEC, from Chair Gary Gensler to the commissioners and staff, vary and do not necessarily represent the Commission's stance unless explicitly stated.
Coinbase Counters Claims in Financial Times Report
In response to the published report, a Coinbase spokesperson revealed that the Financial Times had omitted crucial context regarding their communications with the SEC. They refuted implications that the SEC ordered Coinbase to halt trading of all cryptocurrencies apart from Bitcoin, and they stressed that the SEC's enforcement division did not formally request the delisting of crypto assets. Coinbase maintained that the views expressed in the article were not representative of the Commission as a whole.
Roots of the Legal Conflict Between SEC and Coinbase
The SEC's contentious recommendation emerged before legal proceedings against Coinbase began last month, due to the company's failure to register as a broker, as stated by Armstrong. In June, the SEC accused Coinbase of infringing federal securities law, alleging that it was operating as a broker, exchange, and clearinghouse for unregistered securities - primarily, 13 different cryptocurrencies excluding Bitcoin. Coinbase rebuffed these charges, arguing that the SEC's action violates due process and amounts to an abuse of discretion.
Armstrong's Revelation and the Future of Ether
Armstrong’s recent revelations imply that the SEC considered Ether, the second-largest cryptocurrency, to be security before proceeding with the lawsuit against Coinbase. This echoes previous indications by Gensler that all cryptocurrencies, except Bitcoin, might be classified as securities. The Financial Times has yet to respond to requests for comment regarding these developments.