The CEO of Coinbase says that if they had done what the SEC asked, it would have been “the end of the crypto industry in the US.”
Before it sued the company in June, the Securities and Exchange Commission asked Coinbase to stop dealing on all coins except bitcoin, the company’s CEO told the Financial Times.
The SEC’s request meant that Coinbase, the biggest cryptocurrency exchange in the US, had no choice but to go to court, said CEO Brian Armstrong. He said that stopping those trades would have “basically ended the crypto industry in the US.”
“We really didn’t have a choice at that point,” Armstrong told the FT in an interview that came out Monday.
Monday, a representative for the SEC said that its staff “does not ask companies to delist crypto assets.”
“During an investigation, the staff may share its own ideas about what kinds of behavior may raise questions for the Commission under securities laws,” the spokesperson said.
Coinbase didn’t question whether Armstrong’s claims were true, but a spokesperson said that the FT story “leaves out important context about our conversations with the SEC.”
“The views expressed in the FT article may have been those of some staff at the time, but they were not the views of the Commission as a whole,” a Commission spokesman said.
They also said, “We are still talking with the Commission, but we think that clear, fair rules and action by Congress are the best way forward for US crypto users and companies building the cryptoeconomy in the US.”
Early in June, the SEC filed a lawsuit against Coinbase and its bigger foreign competitor, Binance. The SEC said that both companies were running illegal platforms. The suits were a big step up in the SEC’s effort to bring the crypto business under control after years of letting it work in a legal gray area.
Armstrong told the FT that during talks with the regulator before the case, Coinbase had asked for more information about how the SEC decided that every digital currency other than bitcoin is a security.
“And they said, ‘We’re not going to explain it to you,'” Armstrong told the FT. “You need to delist every asset except bitcoin.”
Crypto companies have fought for a long time to keep their goods from being labeled as traditional securities or commodities. They say that crypto is a new type of digital asset that needs its own rules and laws. The SEC disagrees and has said many times that most crypto offers are assets that should be governed by the same rules as stocks and bonds on Wall Street.
The lawsuits against Coinbase and Binance could help push the issue of control by leading to more lawsuits and, eventually, court reviews that get Congress to act.
Early Monday, shares of Coinbase, which went public in 2021, were up by about 4%. This year, the price has gone up by almost 200%.
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