In a dramatic turn of events, the U.S. Securities and Exchange Commission (SEC) demanded Coinbase, a prominent cryptocurrency exchange, to delist more than 200 cryptocurrencies from its platform, before filing a lawsuit against the company.
According to reports by the Financial Times, the SEC asked Coinbase to halt trading for all cryptocurrencies except Bitcoin, claiming that every asset other than Bitcoin should be considered a security.
Coinbase CEO, Brian Armstrong, revealed that when they sought clarification from the SEC on the reasoning behind this demand, the regulator refused to explain and instead insisted on the massive delisting.
“We really didn’t have a choice at that point,” Armstrong expressed, adding that compliance would have essentially meant the end of the crypto industry in the U.S., which has been booming in recent years.
The SEC’s lawsuit against Coinbase alleges that the exchange operated as an unregistered broker, exchange, and clearing agency. This move follows similar enforcement actions against other crypto exchanges, including Binance.
Market participants had already anticipated the legal showdown when Coinbase disclosed receiving a Wells Notice from the SEC earlier. Despite numerous meetings with the regulatory agency, the enforcement action came as a surprise to the exchange.
On July 7, the SEC claimed that Coinbase was well aware of securities laws applying to its business before the lawsuit was even filed, adding another layer of complexity to the ongoing legal battle. As the crypto industry watches closely, the outcome of this case could have significant implications for the entire U.S. crypto landscape.
