Coinbase CEO Brian Armstrong has responded to the lawsuit filed by the US Securities & Exchange Commission (SEC) against the cryptocurrency exchange. In the lawsuit, the SEC accused Coinbase of trading 13 crypto assets that should have been registered as securities and operating as an unregistered exchange, broker, and clearinghouse. However, Armstrong referred to SEC Chair Gary Gensler as an “exception” and reassured customers that their funds are safe. This is not the first time Armstrong has criticized the SEC for its handling of cryptocurrency regulations.
Coinbase Urges SEC for Crypto Regulations
Coinbase has been urging the SEC to establish specific regulations for cryptocurrencies since 2022. The company, along with other crypto companies, disputes the SEC’s classification of crypto tokens as securities and has called for clearer regulatory guidelines in the industry.
Gensler’s Stance on Crypto Regulations
SEC Chair Gary Gensler has consistently argued that most tokens are securities and has been asserting the SEC’s authority over the crypto market. The US President’s Working Group on Financial Markets has also indicated that certain coins linked to fiat currencies could be considered securities.
Response to Lawsuit and Comparison with Binance Case
Following the lawsuit, Coinbase shares rebounded, showing a rise of approximately 3.1%. Armstrong highlighted the differences between the SEC’s case against Coinbase and its lawsuit against Binance, the largest cryptocurrency exchange globally. Coinbase has not been accused of misappropriating customer funds, unlike Binance, which the SEC accused of selling unregistered cryptocurrency products, inflating trading volumes, and failing to restrict US customers from its platform.
Past Criticism and SEC Investigation
This is not the first time Armstrong has criticized the SEC. In 2021, he accused the agency of engaging in “sketchy behavior” after it threatened to sue Coinbase over a planned lending program. Coinbase subsequently dropped the product. The company had previously disclosed an SEC investigation into its asset listing processes, staking programs, and yield-generating products. Discussions between Coinbase and the SEC about a potential settlement broke down when the SEC claimed that fundamental aspects of Coinbase’s business model were essentially illegal.
Coinbase’s Efforts for Crypto Regulation and Recent Court Order
Coinbase has been actively advocating for the SEC to establish specific crypto regulations since last year. In April, the company sought a response from the regulator through legal channels. On Tuesday, the US Court of Appeals for the Third Circuit ordered the SEC to provide a response within a week. Coinbase’s chief legal officer, Paul Grewal, expressed the company’s willingness to engage in a dialogue with the SEC to bring cryptocurrency within the regulatory framework while also emphasizing its commitment to defending itself in court.
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