The popular cryptocurrency exchange, Coinbase is at the center of a heated legal battle after the U.S. Securities and Exchange Commission (SEC) demanded the delisting of more than 200 cryptocurrencies from its platform. The SEC alleges that Coinbase operated as an unregistered broker, exchange, and clearing agency.
According to a Financial Times 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.”
When Coinbase sought an explanation for the SEC’s conclusion, the regulator reportedly refused to provide any clarifications, instead insisting on the delisting of most tokens. Armstrong argued that compliance with this demand would have effectively halted the U.S. crypto industry.
The SEC’s lawsuit against Coinbase was filed in June, accusing the exchange of violating securities laws. Interestingly, industry insiders had anticipated this legal action after Coinbase disclosed receiving a Wells Notice from the SEC a few months earlier.
Paul Grewal, Coinbase’s chief legal officer, revealed that despite numerous meetings over nine months, the SEC never raised concerns about the platform’s listed assets. To Coinbase’s surprise, the SEC abruptly revealed its intention to pursue enforcement action just one day before a scheduled January meeting.
On July 7, the SEC added that Coinbase was well aware of securities laws applying to its operations before the lawsuit was filed.
The ongoing legal showdown has raised significant concerns among the cryptocurrency community. Many fear that the SEC’s insistence on delisting numerous cryptocurrencies could hinder innovation and stifle the growth of the digital asset market in the U.S.
