Miguel Lopez Coinbase’s CEO, Brian Armstrong, has issued a response to the lawsuit initiated by the U.S. Securities and Exchange Commission (SEC) against his cryptocurrency exchange. The SEC has accused Coinbase of running its crypto asset trading platform as an unregistered national securities exchange, broker, and clearing agency, and of selling unregistered securities in relation to its staking-as-a-service program.
Coinbase’s Head, Brian Armstrong, Addresses SEC Allegations
Brian Armstrong, the CEO of the cryptocurrency exchange Coinbase, which is listed on Nasdaq, has taken to Twitter to react to the lawsuit filed against his company by the U.S. Securities and Exchange Commission (SEC).
The SEC has alleged that Coinbase was operating its crypto asset trading platform as an unregistered national securities exchange, broker, and clearing agency, and that it was selling unregistered securities through its staking-as-a-service program.
Armstrong, in a tweet, stated, “Concerning the SEC’s complaint against us today, we are ready and proud to represent the industry in court to bring some clarity to crypto rules.” The Coinbase leader went on to discuss several factors impacting his exchange’s purported violations of securities laws. He elaborated:
There is no available option for us to ‘come in and register’ — we tried, multiple times — so we do not list securities. We reject the majority of the assets we assess.
Coinbase had stated in March, following a Wells notice from the SEC, that it attempted to register with the regulator but was not granted permission to ‘come in and register.’
Additionally, Armstrong highlighted in his tweet on Tuesday that the SEC and the Commodity Futures Trading Commission (CFTC) “have given conflicting statements, and they don’t agree on what constitutes a security and what is a commodity.” The two regulatory bodies have a disagreement over the classification of ether (ETH). While the SEC Chair Gary Gensler posits that all crypto tokens, except bitcoin (BTC), are securities, the CFTC’s chairman, Rostin Behnam, insists that the second-largest cryptocurrency is a commodity.
Pointing to the current lack of regulatory clarity in the cryptocurrency sector, the Coinbase leader emphasized:
This is the reason why the U.S. Congress is introducing new legislation to rectify this situation, and the rest of the world is moving towards implementing clear rules to support this technology.
“The SEC, rather than publishing a clear set of rules, has opted for regulation by enforcement, and it is harming America. If we need to resort to the courts to achieve clarity, we will do so,” added the CEO of Coinbase.
Armstrong also stated, “The SEC assessed our business and allowed us to go public in 2021.” However, several Twitter users have noted that the lawsuit explicitly mentions that “Declaring a Form S-1 registration statement effective does not constitute an SEC or staff opinion on, or endorsement of, the legality of an issuer’s underlying business.”
Following the SEC’s announcement of its actions against Coinbase, many took to social media to criticize the SEC for its enforcement-based regulation of the crypto industry. Senator Bill Hagerty (R-TN) wrote, “The SEC is weaponizing their role to dismantle an industry. It’s indefensible to allow a company to list publicly and then obstruct their attempts to register.” Senator Cynthia Lummis (R-WY) commented, “The SEC has failed to offer a route for digital asset exchanges to register, and has not provided adequate legal guidance on differentiating a security from a commodity.”
A day before charging Coinbase, the SEC filed 13 charges against Binance and its CEO, Changpeng Zhao (CZ). The regulator also submitted an emergency action application, asking for
