Coinbase is currently facing legal action from the United States Securities and Exchange Commission (SEC) over its failure to register as a broker. However, before the SEC took legal action, the regulatory body instructed Coinbase to remove all cryptocurrencies from its platform, with the exception of Bitcoin. Brian Armstrong, the CEO of Coinbase, disclosed this in a recent interview with Financial Times.
According to the Financial Times report, SEC’s preliminary investigation identified 13 cryptocurrencies, which were primarily low in trading volume on Coinbase’s platform, as securities. The SEC argued that Coinbase came under their regulatory jurisdiction as they offered these cryptos to their customers.
Armstrong revealed the SEC’s stance, stating;
“They came back to us, and they said…we believe every asset other than bitcoin is a security.“
This directive would have had a significant impact on Coinbase’s operations, affecting nearly 200 tokens available on the exchange.
Armstrong explained that Coinbase disagreed with the SEC’s conclusion, as it differed from their own interpretation of the law. However, the SEC refused to provide further explanation and insisted on the delisting of all assets except Bitcoin.
Feeling compelled to take action, Coinbase saw going to court as the only viable option. Armstrong explained that the decision to delist all assets, except for Bitcoin, would have effectively halted the crypto industry in the U.S. despite it not being mandated by the law. This situation, according to Armstrong, made the choice straightforward.
On June 6, the SEC officially filed charges against Coinbase for allegedly violating federal securities law. The accusations leveled against the exchange include functioning as an unregistered broker, exchange, and clearinghouse for securities, specifically involving the 13 identified cryptocurrencies (excluding Bitcoin). Additionally, Gary Gensler, the SEC Chair, expressed his disapproval of Coinbase’s alleged failure to adequately protect its customers against fraud and manipulation.
As the legal battle unfolds, the outcome of this case could carry far-reaching implications for the entire cryptocurrency industry within the United States. Market participants are closely monitoring the proceedings, as the decision could set significant precedents for the regulation and trading of cryptocurrencies in the future.
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