Before Coinbase Lawsuit, SEC Reportedly Requested the Crypto Exchange to Only Support Bitcoin (BTC) Trading

The US Securities and Exchange Commission (SEC) had reportedly requested Coinbase (NASDAQ:COIN) to halt trading in all virtual currencies with the exception of Bitcoin (BTC) prior to filing a lawsuit against the crypto exchange in June of this year, the Financial Times revealed on Monday (July 31, 2023). The FT has cited CEO Brian Armstrong as a source.

In statements shared with the FT, Armstrong reportedly said:

“We really didn’t have a choice at that point. Delisting every asset other than bitcoin, which by the way is not what the law says, would have essentially meant the end of the crypto industry in the US. It kind of made it an easy choice …  let’s go to court and find out what the court says.”

The SEC has alleged that Coinbase has been operating illegally or in a non-compliant manner since it reportedly failed to register as an exchange operator. But this may not necessarily be the case, given that many crypto firms in the US claim that the SEC does not actually review their submissions for registration.

The US regulator further claims that Coinbase traded around 13 different crypto tokens that may qualify as securities that should actually have been registered, including digital tokens Solana (SOL), Cardano (ADA), and Polygon (MATIC).

The SEC reportedly told the Financial Times that its enforcement unit didn’t make any official requests for firms to delist certain crypto-assets.

“In the course of an investigation, the staff may share its own view as to what conduct may raise questions for the commission under the securities laws,” the Finance Times noted, while  referencing statements from the SEC.

The SEC also filed a lawsuit against Binance in June 2023, with both civil cases being part of SEC Chair Gary Gensler‘s ongoing efforts to claim jurisdiction over the nascent crypto-assets and blockchain sector.

Gensler has often referred to the crypto ecosystem as the “Wild West” that has continued to undermine investor trust in the US financial markets. Cryptocurrency businesses state that the SEC guidelines lack clarity, and that the agency is overreaching by attempting to regulate their operations.

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