SEC Wanted Coinbase To Trade Only Bitcoin Before Suing Exchange, FT Report

Republished By Plato

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According to a report by the Financial Times, Coinbase’s CEO Brian Armstrong revealed that the U.S. SEC had advised Coinbase to cease trading in any cryptos except Bitcoin prior to taking legal action targeting the exchange. According to an SEC spokesman, company delisting of cryptocurrency assets is not requested by SEC officials. However, staff members may offer their own opinions during investigations about whether certain conduct could give the commission cause for concern about securities regulations.

“The four SEC commissioners, SEC staff and SEC Chairman Gary Gensler have all expressed diverse perspectives on various topics; these opinions do not necessarily represent the institution’s position until specifically stated,” the spokesman stated.

Coinbase responded to the Financial Times article, stating that it left out important context relating to the exchange’s interactions with the SEC. According to the exchange, the article implied, whether on purpose or accident, that Coinbase was required by the SEC to terminate all crypto trading except for Bitcoin. The SEC’s enforcement division did not formally request that businesses delist crypto assets, as it was mentioned by the U.S. SEC itself later in the article.

Coinbase went on to say that while the opinions expressed in the FT piece may have been those of individual SEC staff members at the time, they did not necessarily reflect those of the commission as a whole. Armstrong reportedly revealed to FT that the SEC made the suggestion before taking legal action against the NASDAQ-listed company last month for failing to register as a broker, according to the story.

On June 6, 2023, the SEC filed a complaint against Coinbase, stating that it had violated federal securities laws by acting as a broker, an exchange and a clearinghouse for unregistered securities, notably 13 various cryptocurrencies but not Bitcoin. In response, Coinbase claimed that the SEC’s move was against the law and an abuse of discretion.

While Ripple won a court battle against the SEC, proving that its XRP coin is not a security, Coinbase and the SEC are still embroiled in a legal struggle. Armstrong recounted that the SEC insisted all assets, excluding Bitcoin, were securities but failed to provide a satisfactory explanation for their conclusion, leading Coinbase to consider legal recourse.

Previously, Gensler implied that all cryptocurrencies, except Bitcoin, should be classified as securities. Armstrong’s revelations indicate that the SEC may have considered Ether, the second-largest cryptocurrency, as a security before pursuing court action targeting Coinbase.

Industry actors such as Bit Mining Ltd. (NYSE: BTCM) are likely to keep a close eye on these legal proceedings since the outcome could shape the future trajectory of the industry.

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