Coinbase CEO, Brian Armstrong, has expressed his positive outlook on the recent lawsuit filed by the United States Securities and Exchange Commission (SEC) against the exchange. Armstrong believes that the legal battle will help establish much-needed clarity and regulations surrounding cryptocurrencies.
In separate statements issued by Coinbase and Armstrong, both parties conveyed their confidence in the exchange’s legal team and their belief in prevailing against the SEC. Armstrong took to Twitter to share his thoughts, stating that Coinbase is proud to represent the crypto ecosystem in court and that a legal confrontation is necessary to achieve clarity in the crypto industry and its governing rules.
Armstrong highlighted that the SEC had previously reviewed Coinbase’s business and allowed it to become a public company in 2021. He emphasized that Coinbase does not list securities and rejects the majority of assets it reviews. Armstrong also pointed out the conflicting statements from the SEC and the Commodity Futures Trading Commission (CFTC), indicating their disagreement on classifying assets as securities or commodities.
The SEC’s lawsuit against Coinbase alleges that the exchange violated US securities laws by offering unregistered securities. The regulator claims that Coinbase failed to register as a clearing agency, broker, or national securities exchange. Additionally, the lawsuit argues that certain crypto tokens listed on Coinbase, including popular assets like Polygon (MATIC), Cardano (ADA), and Solana (SOL), qualify as securities. The SEC further accuses Coinbase of operating as an unregistered security broker since 2019, two years prior to its initial public offering.
Coinbase and Armstrong have been critical of the SEC for its lack of clear regulations and guidance regarding how securities laws apply to the crypto industry. In April, Coinbase sued the SEC after the regulator failed to respond to a petition seeking rules for digitally traded securities. The SEC claimed that crypto already had sufficient rules and regulations in place and requested the dismissal of the suit. In response, Coinbase filed a mandamus reply supporting its case against the SEC.
While the United States Congress is considering introducing crypto-specific legislation to bring clarity to the industry, Coinbase and the SEC remain entangled in separate legal proceedings.
Coinbase has emphasized its commitment to regulatory compliance and accused the SEC of failing to cooperate. The exchange stated that it mentioned “staking” 57 times in its approved S1 report and sought private guidance from the SEC on maintaining legal compliance. However, it is worth noting that the SEC’s approval of Coinbase’s registration statement did not signify approval of the exchange’s underlying business activities, as clearly stated by the regulator.
The ongoing legal battle between Coinbase and the SEC will likely contribute to the ongoing dialogue and development of crypto regulations in the United States.