Coinbase CEO Brian Armstrong revealed to the Financial Times that the U.S. Securities and Exchange Commission (SEC) had asked the crypto exchange to stop trading in all cryptocurrencies other than Bitcoin (BTC) prior to suing the company. An SEC spokesperson told journalists, SEC staff does not ask companies to delist crypto assets. 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.
Coinbase further clarified that the views shared in the Financial Times article may have represented the views of some staff at the time, but did not represent those of the Commission more broadly. Armstrong said that the SEC made the recommendation before launching legal action against the Nasdaq-listed company last month for failing to register as a broker.
SEC Chair Gary Gensler has previously suggested that all cryptocurrencies other than Bitcoin are securities. Armstrong’s revelations suggest the SEC viewed Ether, the second-largest cryptocurrency, as a security before suing Coinbase.
Coinbase and the SEC are now embroiled in a legal process, even as Ripple scored a partial victory in a case against the SEC, ruling that Ripple’s XRP token is not a security. Armstrong said the SEC recommendation left Coinbase no choice but to head to court.