SEC, Ahead of Suit, Urges Coinbase to List Only Bitcoin

SEC asked Coinbase to delist all cryptocurrencies from the listing, except Bitcoin, before filing suit against the exchange. In an interview with the Financial Times, the platform’s CEO Brian Armstrong said.

Armstrong said that the framing left no choice but to take the dispute to court.

“They [SEC officials] told us [..] that every asset, besides Bitcoin, is a security. We asked how you arrived at that conclusion [..], and were told: “We’re not going to explain it to you.” At that moment we truly had no choice — to exclude all assets [from the listing — more than 200 cryptocurrencies], other than Bitcoin, which, incidentally, would not comply with the law, effectively spelling the end of the industry in the US. This somewhat eased the choice. [..] Let’s go to court and see what it decides,” — Armstrong said.

SEC representatives, in conversation with the publication, denied issuing an official request to Coinbase to delist crypto assets from the listing.

“During the investigation, staff may share their own views on which conduct could raise questions for the Commission under securities laws,” they said.

The agency’s suit accuses the company of an unregistered offer of 13 securities in the form of a number of tokens and of the unlawful combination of three functions — broker, exchange and clearinghouse — which are typically separated in traditional markets. The regulator also targeted the staking program Coinbase Earn. 

In March 2023 the exchange received a notice from the regulator about an inquiry into the listing procedures on the platform and its products — Coinbase Prime, Coinbase Wallet and Coinbase Earn. 

On 25 April the company filed a lawsuit to obtain a response from the agency to the July 2022 request. In it Coinbase called for clarity in cryptocurrency regulation.

The SEC called the firm’s claims unfounded. Officials noted that the agency is not obliged to issue new rules, and that the company ‘has no right to sue the regulator’.

On 22 May Coinbase filed a new complaint against the Commission to obtain a response to the July 2022 inquiry.

Subsequently the US Chamber of Commerce stood in support of Coinbase and accused the regulator of ‘deliberately creating a dangerous and uncertain environment’ for crypto firms in the country.

As a reminder, on July 13 a judge ruled that selling XRP directly to institutional investors violated SEC rules, while offers to retail investors on exchanges did not. On the same day Coinbase announced the relisting of the asset.

The Commission filed a suit against Ripple in 2020, accusing the company of selling unregistered securities worth about $1.3 billion in the form of tokens.