The U.S. Securities and Exchange Commission (SEC) urged cryptoasset exchange platform Coinbase to cease trading any other cryptocurrency besides bitcoin before proceeding early last June to sue the company for operating as an unregistered exchange, Coinbase CEO Brian Armstrong has revealed.
“We really had no choice at the time. To eliminate all assets other than bitcoin, which by the way is not what the law says, would have essentially meant the end of the cryptocurrency industry in the U.S.,” Armstrong tells ‘Financial Times’. “Somehow it made it an easy choice….. let’s go to court and find out what they say,” he adds.
For its side, the US SEC indicated to the newspaper that it did not make formal requests for platforms to remove cryptoassets, noting that, in the course of an investigation, the staff may share its own opinion on what conduct may raise concerns for the Commission under securities laws.
The SEC charged Coinbase early last June with operating as an unregistered national securities exchange, broker-dealer and clearing agency, in addition to also accusing the entity of failing to register its cryptoasset service.
The SEC’s complaint, filed in the Southern District Court of New York, a day after the one filed against the Binance platform, alleges that, since at least 2019, Coinbase has made billions of dollars “unlawfully facilitating” the buying and selling of cryptoassets and accuses the platform of relaxing the traditional services of an exchange, ‘broker’ and clearing agency without having registered any of those functions with the SEC, as required by law.
In this regard, the U.S. markets regulator believes that Coinbase’s failure to register has deprived investors of meaningful protections, including SEC inspection, record-keeping requirements and conflict of interest safeguards, among others.
In its complaint, the SEC also alleges that Coinbase’s holding company, Coinbase Global Inc (CGI), is a controlling figure of Coinbase and, therefore, is also liable for certain violations committed by Coinbase.