The CEO of Coinbase, Brian Armstrong, commented on the lawsuit filed by the U.S. Securities and Exchange Commission (SEC) against our exchange. We are confident in our position and intend to fight for clarity in the regulation of digital assets through legal proceedings. Our Chief Legal Officer, Paul Grewal, confirmed that we have actively engaged with the regulator but have not achieved the desired results in numerous negotiations. This is not the first time the SEC has taken a strict stance. In the past, they have imposed sanctions on Kraken, a trading platform, Paxos, the issuer of the BUSD stablecoin, and also filed a lawsuit against Binance.
The SEC has brought several allegations of rule violations against the Coinbase exchange, claiming that it offers trading services for unregistered securities. However, our exchange’s activities are in accordance with the relevant rules set by the Commission.
Furthermore, the SEC has expanded its list of securities to include popular altcoins such as Cardano, Solana, Polygon, and Filecoin.
According to recent information, Coinbase, one of the leading cryptocurrency exchanges, has become the center of a legal process. The company’s CEO, Brian Armstrong, addressed the issue on his Twitter account. He expressed pride in Coinbase being at the forefront of fighting for the rights of participants in the cryptocurrency industry in court. Armstrong also pointed out four weaknesses in the SEC’s arguments. Let’s examine each of them in more detail.
Firstly, the SEC audited our business and allowed us to conduct a public stock offering in 2021. It is worth noting that Coinbase successfully completed its IPO, and the company’s shares began trading on NASDAQ. This indicates that the listing process was completed, and regulators, including the SEC, oversaw this process. Therefore, at that time, the features of our business fully satisfied the Commission. And now, just two years later, there are suddenly allegations of Coinbase violating norms and rules.
Secondly, it is not as simple as “just going and registering with the SEC.” We have made multiple attempts to do so. We do not offer securities trading on our platform. Moreover, we actively reject the listing of most assets that we consider. We adhere to strict criteria and requirements to ensure the safety and compliance of our clients.
On June 6th, Coinbase’s Chief Legal Officer, Paul Grewal, presented a report to the U.S. Congress. He emphasized that the company has been collaborating with regulators since its inception nearly ten years ago. He also noted the successful IPO and obtaining the relevant approval from the SEC for that procedure. This indicates that Coinbase has always sought to collaborate with regulators and comply with the relevant norms and rules.
According to sources from Cointelegraph, Coinbase’s CEO, Brian Armstrong, released a statement on his Twitter account regarding the lawsuit involving the cryptocurrency exchange. Armstrong expressed pride in Coinbase becoming a major participant in the fight for the rights of cryptocurrency industry players in court. He also highlighted four weaknesses in the SEC’s arguments. Let’s examine each of them in more detail.
Firstly, Coinbase is a registered company providing financial services under the U.S. Department of the Treasury. Additionally, Coinbase Asset Management has obtained an investment advisor license from the SEC and a market contract license from the CFTC. The exchange also holds licenses for money transfers in 45 U.S. states.
However, on the day the SEC filed the lawsuit against Coinbase, a working group of ten states issued an order to file claims against the exchange. Coinbase was given 28 days to present evidence as to why regulatory bodies in these states should not issue an order to cease operations due to securities law violations.
Moving on to Armstrong’s next argument.
Secondly, the SEC and CFTC make conflicting statements and have not reached a consensus on what to consider a security in the cryptocurrency space. This lack of clarity creates confusion for industry participants like Coinbase, who strive to comply with regulations but face challenges in determining which assets are classified as securities.
Thirdly, the SEC’s claim that Coinbase is required to register as a securities exchange overlooks the fact that Coinbase is primarily an online platform that allows users to buy, sell, and store cryptocurrencies. It does not operate as a traditional securities exchange. Coinbase provides a marketplace for individuals to trade digital assets, including cryptocurrencies that are not deemed securities.
Lastly, Coinbase actively engages in dialogue and cooperation with regulators. We have made efforts to engage with the SEC to seek regulatory clarity and collaborate on finding appropriate frameworks for the cryptocurrency industry. However, the SEC has not provided clear guidelines or communicated its expectations effectively.
In summary, Coinbase is confident in its position and intends to defend itself against the SEC’s allegations in court. We believe in the importance of regulatory clarity in the cryptocurrency industry and will continue to work towards establishing a framework that protects investors while fostering innovation and growth.
