SEC Staff Asked Coinbase to Delist all Crypto Except BTC Before Lawsuit

  • During an interview with FT, CEO Brian Armstrong said that before the lawsuit a SEC staff member had said that all crypto except BTC was security, and should be delisted.
  • When asked how he came to that conclusion, the SEC staff member reportedly said “we’re not going to explain it to you, you need to delist every asset other that Bitcoin”.
Coinbase CEO Brian Armstrong appears on stage at the 2014 TechCrunch Disrupt Europe/London

Coinbase CEO Brian Armstrong appears on stage at the 2014 TechCrunch Disrupt Europe/London, at The Old Billingsgate on October 21, 2014 in London, England. Anthony Harvey/Getty Images for TechCrunch

Employees at the U.S. Securities Exchange Commission (SEC) had previously asked crypto exchange Coinbase to delist all cryptocurrencies other than Bitcoin (BTC) from its platform, the Financial Times (FT) reported on 31 July.

The publication cited Coinbase CEO Brian Armstrong, who said in an interview that staff from the securities regulator had asked the exchange to stop trading all cryptocurrencies, except Bitcoin, before the SEC filed a lawsuit against Coinbase. When asked why the nearly 250 should be delisted from the platform, the SEC staff reportedly said it believes “every asset other than Bitcoin is a security”.

The Coinbase CEO further recalled that after asking how the staff had come to that conclusion, they received a response of “we’re not going to explain it to you, you need to delist every asset other than Bitcoin”. A spokesperson for the SEC told the FT that its enforcement division did not make formal requests for “companies to delist crypto assets”, and that its staff “may share its own view as to what conduct may raise questions for the commission”.

During his interview, Armstrong noted that had Coinbase agreed to the staff’s request, it would have set a dangerous precedent that would have “essentially meant the end of the crypto industry”. Considering that the request was to delist all 250 crypto assets from the platform, Armstrong said it was an “easy choice” to go to court and “find out what the court says”.

The SEC filed a lawsuit against Coinbase at the start of June, accusing the company of operating an unregistered securities exchange by naming 13 crypto assets that the regulator considered as unregistered securities. A day later, the regulator also made similar accusations against the largest exchange by trading volume, and also filed a lawsuit against Binance. Earlier this month, a federal judge ruled that trading XRP through crypto exchanges did not qualify as selling securities, a decision that could have a significant impact in Coinbase and Binance’s battle against the SEC.

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