Coinbase asked to Cease Trading in All Cryptocurrencies Excluding Bitcoin Before Lawsuit from SEC

Before taking legal action against Coinbase, the U.S. Securities and Exchange Commission (SEC) had asked the crypto exchange to halt trading of all cryptocurrencies except bitcoin, according to a Financial Times report, citing Coinbase CEO Brian Armstrong.

According to the report, Armstrong told FT that “the SEC made the recommendation before launching legal action against the Nasdaq-listed company last month for failing to register as a broker”.

The SEC charged Coinbase on June 6, accusing them of violating federal securities law by operating simultaneously as a broker, an exchange, and a clearinghouse for unregistered securities, which refer to 13 different cryptocurrencies excluding bitcoin. Coinbase refuted that the SEC's actions violated due process and constitutes an abuse of discretion. The legal battle between Coinbase and the SEC continues, while Ripple won a partial victory against the SEC, its XRP token was ultimately ruled not to be a security.

“They 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,” said Armstrong. 

According to Armstrong, the SEC recommended delisting all assets other than bitcoin, without explaining their reason, which pushed them to go to court.

The enforcement division did not make formal delisting requests, the SEC told the Financial Times. “In the course of an investigation, the staff may share its own view as to what conduct may raise questions for the commission under the securities laws,” it added.

Previously, SEC Chairman Gary Gensler had suggested that all cryptocurrencies excluding bitcoin are considered as securities. Armstrong's revelations indicate that the U.S. Securities and Exchange Commission regarded the second largest Cryptocurrency Ether as a security before suing Coinbase. 

However, Gensler, the four SEC commissioners, and SEC staff have had different opinions on matters, which may not necessarily reflect the agency's stance unless expressed as so.

(Source: Coindesk)