Coinbase has revealed that the Securities and Exchange Commission (SEC) had asked it to stop trading in all cryptocurrencies except Bitcoin before suing the crypto exchange. Thus, Coinbase was forced to act by going to court to avert possible damage to the industry.
The information was shared with the Financial Times by Coinbase's Chief Executive Officer, Brian Armstrong. The SEC sued Coinbase in June for allegedly failing to register as an exchange and listing at least 13 cryptocurrencies that are considered securities without registering them with the commission.
"We really did not have a choice at that point because delisting every asset other than Bitcoin, which is not what the law says, would have essentially meant the end of the crypto industry in the US," Armstrong told the FT.
SEC Denies Coinbase’s Claims
In contrast, the SEC reportedly told the FT that its enforcement division did not make any formal request to cryptocurrency exchanges to delist crypto assets. According to the publication, the securities regulator dismissed the claims, saying they could have been the views of its staff.
In April, Coinbase sued the SEC, requesting the court to compel the regulator to provide proper guidance for the digital asset industry. The lawsuit followed a Wells Notice, a formal warning that an enforcement action was imminent, issued against the exchange by the SEC in March.
Additionally, in June, the SEC sued Coinbase for allegedly operating as an exchange, broker, and clearing agency without registering with the commission. Besides that, the authority accused the company of failing to register its staking program.
SEC-Crypto Showdown
There has been an ongoing conflict between the SEC and the cryptocurrency companies operating in the US. The SEC's Chair, Gary Gensler, has accused the industry of ignoring the law. In contrast, the crypto companies are blaming the regulator for not providing proper guidelines for the industry.
About two weeks ago,Finance Magnates reported that the SEC and Coinbase had their first hearing in court. During the hearing, the exchange dismissed the regulator's allegations that it was listing unregistered securities. According to Coinbase, the regulator approved its application, which included the flagged cryptocurrencies, to go public in 2021.
However, the SEC argued that granting the exchange the approval to operate as a public company did not mean endorsing its activities. The case is expected to have a significant impact on the industry and how digital assets could be regulated.
This article was written by Jared Kirui at www.financemagnates.com.
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