The US Securities and Exchange Commission (SEC) asked Coinbase to halt the trading of all cryptocurrencies except for Bitcoin before pressing charges against the exchange for breaching federal securities law.
According to Coinbase CEO Brian Armstrong, delisting every other asset except for Bitcoin would mean the end of the crypto industry.
Coinbase vs. SEC
In an interview with the FT, Armstrong said the SEC made the recommendation just before launching legal action.
The exec’s claim regarding the SEC staff’s comments echoes Gary Gensler’s views regarding Bitcoin being an outlier while other crypto-assets are securities.
“They came back to us, and they said we believe every asset other than bitcoin is a security. And, we said, well how are you coming to that conclusion, because that’s not our interpretation of the law. And they said, we’re not going to explain it to you, you need to delist every asset other than bitcoin.”
In its lawsuit against the Nasdaq-listed exchange, the SEC identified 13 assets as securities except Bitcoin.
These are – Solana (SOL), Cardano (ADA), Polygon (MATIC), Filecoin (FIL), The Sandbox (SAND), Axie Infinity (AXS), Chiliz (CHZ), Flow (FLOW), Internet Computer (ICP), Near Protocol (NEAR), Voyager Token (VGX), Dash (DASH), and Nexo (NEXO).
Additionally, the agency alleged that Coinbase had not registered with the regulatory watchdog as a broker, national securities exchange, or clearing agency, thereby circumventing the disclosure regulations set forth by Congress for the securities markets.
In response, Coinbase filed a motion to dismiss the lawsuit arguing the SEC’s failure to open dialogues despite several attempts by the exchange in recent months.
However, the SEC remained adamant with its move and even went as far as to claim that the exchange warned its shareholders “repeatedly” since its Nasdaq listing on the risk that cryptocurrency trading on the platform could be considered as securities.
SEC’s Attack on Binance
In addition to the lawsuit against Coinbase, the regulator also sued another crypto behemoth, Binance, and its CEO, Changpeng ‘CZ’ Zhao, over several violations as part of Gensler’s aggressive push to assert jurisdiction over the digital asset space.
Several employees of Binance’s US affiliate were laid off to fight what the crypto exchange views to be a “protracted and expensive litigation.”
Meanwhile, Binance roped in M. Kendall Day, who happens to be a former prosecutor at the US Department of Justice (DOJ). His primary role involves representing the firm in the legal battle against the SEC.