Coinbase was reportedly ordered by the U.S. Securities and Exchange Commission (SEC) to stop all non-Bitcoin (BTC) trading before the regulator’s charges against it.
The exchange’s CEO Brian Armstrong told The Financial Times that Coinbase was warned by the SEC to halt all crypto trading besides Bitcoin with no further explanation.
“[The SEC] came back to us, and they said… we believe every asset other than Bitcoin is a security. 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 says the SEC’s hard-lined stance forced Coinbase to fight the lawsuit in court.
“We really didn’t have a choice at that point, delisting every asset other than Bitcoin, which by the way is not what the law says, would have essentially meant the end of the crypto industry in the US. It kind of made it an easy choice… let’s go to court and find out what the court says.”
Court documents from earlier this month revealed that the SEC believes Coinbase was aware that it was potentially violating securities laws before the regulator’s lawsuit against the crypto exchange.
The SEC said in its court filing,
“And since becoming a public company, Coinbase has repeatedly informed its shareholders of the risk that the crypto assets traded on its platform could be deemed securities and therefore that its conduct could violate the federal securities laws – including in the very registration statement it now points to as proof that the SEC supposedly blessed its conduct.
These actions clearly show that Coinbase understood that the securities laws could apply to its conduct and knew which rules to consider in evaluating the legality of its conduct, but nevertheless made the calculated decision to take on this risk in the name of growing its business.”
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