David Edwards
According to a report by the Financial Times, the United States Securities and Exchange Commission (SEC) advised Coinbase, a prominent cryptocurrency exchange, to halt trading in all cryptocurrencies except bitcoin (BTC) before initiating legal action against the company. Coinbase CEO Brian Armstrong revealed that the SEC made this recommendation to the exchange. The legal action was taken against Coinbase for allegedly not registering as a broker with the SEC.
On June 6, the SEC took legal action against Coinbase, accusing the exchange of violating federal securities law. The SEC alleged that Coinbase was functioning as a broker, an exchange, and a clearinghouse for unregistered securities, including 13 different cryptocurrencies, excluding bitcoin. In response, Coinbase strongly reacted, asserting that the SEC’s action infringed upon due process and constituted an abuse of discretion.
As a result, Coinbase and the SEC are currently engaged in a legal battle as they navigate through the legal process to resolve the matter.
In a separate case, Ripple, the company behind the XRP token, achieved a partial victory against the SEC. The court ruled in favor of Ripple, determining that the XRP token is not considered a security under federal securities law. This ruling provided some relief for Ripple in its legal dispute with the SEC over the regulatory status of XRP.
“They came back to us, and they said . . . we believe every asset other than bitcoin is a security,” Armstrong said according to the FT. “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.”
Armstrong said the SEC recommendation left us no choice but to head to court.
The SEC told the FT its enforcement division did not make formal requests for “companies to delist crypto assets.”
