The US Securities and Exchange Commission (SEC) reportedly requested Coinbase, one of the leading cryptocurrency exchanges, to delist all cryptocurrencies except for Bitcoin before taking legal action against the platform for alleged violations of federal securities law. Coinbase CEO Brian Armstrong revealed that if they were to comply with the SEC’s recommendation, it would effectively mean the end of the crypto industry as we know it.
In an interview with the Financial Times, Armstrong stated that the SEC made this request just before initiating legal proceedings against Coinbase. The CEO’s remarks align with SEC Chairman Gary Gensler’s stance that Bitcoin is an outlier in the crypto market, while other digital assets should be classified as securities.
According to Armstrong, the SEC informed Coinbase that they considered every asset, except for Bitcoin, to be a security. When Coinbase questioned this interpretation of the law, the SEC refused to provide any further explanation and insisted on the delisting of all assets except for Bitcoin.
In its lawsuit against Coinbase, the SEC identified 13 cryptocurrencies as securities, including Solana, Cardano, Polygon, Filecoin, The Sandbox, Axie Infinity, Chiliz, Flow, Internet Computer, Near Protocol, Voyager Token, Dash, and Nexo. The regulatory agency also accused Coinbase of failing to register as a broker, national securities exchange, or clearing agency, thereby circumventing important disclosure regulations.
Coinbase has responded to the lawsuit by filing a motion to dismiss, arguing that the SEC has been unresponsive to their attempts to engage in dialogue in recent months. However, the SEC remains steadfast in its pursuit of legal action and even claims that Coinbase repeatedly warned its shareholders about the potential risks associated with cryptocurrency trading on the platform being considered securities.
It is worth noting that the SEC’s actions are not limited to Coinbase. The regulatory agency has also filed a lawsuit against Binance, another major player in the crypto industry, and its CEO Changpeng Zhao, for alleged violations. Binance has taken steps to defend itself, including hiring M. Kendall Day, a former prosecutor at the US Department of Justice, to represent the company in the legal battle against the SEC.
The SEC’s actions against Coinbase and Binance are part of Chairman Gensler’s aggressive approach to assert jurisdiction over the digital asset space. These developments highlight the increasing regulatory scrutiny faced by cryptocurrency exchanges and their efforts to navigate the complex legal landscape.
In conclusion, the SEC’s request for Coinbase to delist all cryptocurrencies except for Bitcoin showcases the regulatory challenges faced by the crypto industry. As the legal battle unfolds, the outcome will have significant implications for the future of digital assets and their classification under securities law.