Under SEC fire, crypto firms choose to die hard

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When Coinbase CEO Brian Armstrong tweeted Tuesday night that the SEC threatened to sue if the company launched its high-yield loan product, Ripple CEO Brad Garlinghouse was quick to respond. Just 90 minutes after Armstrong’s tweet, Garlinghouse tweeted a “Die Hard” meme with Bruce Willis saying, “Welcome to the party, mate.”

The implicit message: Ripple has been fighting the SEC for over a year, and now Coinbase is part of the fight, like it or not. Mark Cuban also had a message for Armstrong: “You have to go on the offensive. Cuban declined to expand for Decrypton on what that might look like (“It’s up to them to decide”), but it can be said that Armstrong is already playing the offensive with the tone of his tweets. He accused the agency of “behind closed doors intimidation tactics” and concluded sarcastically: “It’s good if you actually apply [guidance] equally across the industry. “

What happens next will not be determined by the tweets. The leading companies in the crypto industry are under attack and they have started to strike back by demanding a fair and consistent set of rules that clearly state what is legal and what is not.

They’re right. Ripple’s ugly battle with the SEC is over whether its sale of XRP tokens was an unregistered securities offering. Why has the SEC waited so long for Ripple to sell XRP for eight years before suing, and why does the agency appear to be applying one legal test to Ripple and another to Ethereum? As for Coinbase, it says it has done everything possible to consult with the SEC on how to make its offered loan product as safe and secure as possible for investors. According to Armstrong, the agency would not speak to them.

Then there’s the decentralized Uniswap exchange, one of the most transparent companies in the fast and furious DeFi industry. But the SEC chose him as the target for investigation, neglecting, as crypto lawyer Jake Chervinsky noted, other “blatant frauds,” carpet pulls and push-ups and dumps in DeFi.

It’s no wonder Armstrong, Garlinghouse and others have had enough and concluded that it might be better to roll the dice in the courts rather than keep trying to adhere to the crypto policy. opaque current of the SEC and its strict applications.

This is all a surprising turning point considering that just a few months ago, when new SEC chairman Gary Gensler took the helm, the industry was hailing him as pro-crypto because he taught a blockchain course at MIT been the advocate the crypto folks have assumed (don’t hold your breath on this US Bitcoin ETF approval) he looks downright hostile. Now the question of what the Gensler regime will do next hangs over all cryptoland companies, traders, miners and investors.

One can only guess. Gensler may be facing pressure from members of the White House and the Treasury Department who view crypto as a threat to the US dollar. Or maybe he really thinks the SEC is protecting investors. Many of those same investors are likely cursing him for blocking out new ways to earn more than 5% interest on savings accounts rather than the 0.5% or less that banks pay.

Whatever the reason for the conflict, the big crypto companies are in a dogfight, and what they do next will determine the future of the industry. Fighting the federal government is a daunting task, but unlike the infighting of the recent past, the big names in crypto have come together like never before.

It was evident this week when Kraken CEO Jesse Powell, a longtime ideological and business rival to Armstrong, spoke strong words of support for Coinbase. If Kraken and Coinbase can stand together, they can also form a united front with Uniswap, Ripple and all the other crypto firms besieged by the SEC. Such an alliance would allow the industry to establish a common legal strategy.

Of course, there is no guarantee that it will work. The federal government has killed other emerging industries in the past, including online poker. But given that the SEC now appears to be overtly anti-crypto, now is the time for big companies to become John McClane completely.

This is Roberts on Crypto, a weekend column by Decrypt editor-in-chief Daniel Roberts and Decrypt editor-in-chief Jeff John Roberts. Sign up for the Decrypt Debrief newsletter to receive it in your inbox in the future. And read last weekend’s column: Altcoins Moon, Bitcoin Stays on Earth.

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