- Coinbase CEO Brian Armstrong characterizes the SEC Chair as an “exception” and assures the safety of customer funds.
- Coinbase was accused by the SEC of trading unregistered securities, including Solana, Cardano, and Polygon.
- Armstrong seeks regulatory registration but faces a cool reception from SEC Chair Gary Gensler.
On June 8, Reuters reported that Coinbase CEO Brian Armstrong responded strongly to the legal action initiated by the U.S. Securities and Exchange Commission (SEC) Chair, characterizing him as an “exception” and affirming the safety of customers’ funds.
According to the U.S Securities and Exchange Commission (SEC), Coinbase was accused on Tuesday of trading in at least 13 cryptocurrencies that qualify as securities and should have been registered. These tokens include Solana, Cardano, and Polygon. The SEC further claimed that Coinbase was functioning as an unregistered exchange, broker, and clearinghouse.
Armstrong, who has been vocal in his criticism of the SEC and has actively advocated for more transparent regulations in the crypto industry, stated during a Bloomberg conference that Coinbase had sought to become registered and engaged with the regulator. However, their initial meeting with Chair Gary Gensler was met with a chilly reception.
Gensler has consistently maintained that the majority of tokens are considered securities, and he has been assertive in establishing the SEC’s jurisdiction over the crypto market. His recent focus has been on addressing unregistered activities related to crypto broker-dealers, exchange trading, and clearing. On the other hand, crypto companies, including Coinbase, contest the classification of crypto tokens as securities and have repeatedly urged the SEC to develop clear guidelines.
Armstrong expressed his perspective on the SEC chair, describing him as an “outlier.” He further mentioned that he had discussions with several lawmakers who displayed support for establishing a well-defined regulatory framework for the crypto industry.
Following these developments, Coinbase shares experienced a recovery on Wednesday, showing an increase of approximately 3.1% and reaching a value of $53.2.
On Monday, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Binance, the largest cryptocurrency exchange globally. The allegations included selling cryptocurrency products without registering them as securities, engaging in artificial inflation of trading volumes, diverting customer funds, and failing to enforce restrictions on U.S. customers accessing its platform.
Armstrong made a clear distinction between the cases involving Coinbase and Binance, emphasizing their significant differences. He pointed out that Coinbase has not faced allegations of misappropriation of customer funds, and he himself has not been personally named in any legal action.
Meanwhile, Paul Grewal, the chief legal officer of Coinbase, expressed confidence on Tuesday that the SEC would not attempt to freeze Coinbase’s assets as they did with Binance. Grewal stated that the standards necessary for such an asset seizure do not apply to Coinbase’s situation.
Binance issued a statement on Monday vowing to vigorously defend itself against the lawsuit, asserting that it is a reflection of the SEC’s “misguided and deliberate refusal” to offer clear guidance to the cryptocurrency industry.
