The SEC’s crypto warning ‘not good for America’

[ad_1]

The chief executive of Coinbase Global (COIN) said Thursday that a warning his company received from the Securities and Exchange Commission “is not constructive” and “not good for America,” an escalation in the fight between the largest US crypto exchange and a powerful Washington Regulator.

Brian Armstrong’s video message posted on Thursday was part of a broader public response by Coinbase to the receipt of a Wells notice last month. The notice said SEC staff had made a “preliminary determination” to recommend enforcement action for violations of federal securities laws.

On Thursday, Coinbase also released a letter sent to the SEC in response to Wells’ notice. SEC staff, Coinbase said in the letter, “maintain that Coinbase has been operating illegally since at least 2018,” but the staff’s legal theories are “flawed and untested.”

It also says an SEC enforcement action “would present major programmatic risks to the commission” and would “fail on substance because Coinbase does not list, clear, or trade securities.”

Coinbase shares were flat on Thursday. They are up more than 53% since early January but remain down 82% since its initial IPO in April 2021.

The fight between Coinbase and the SEC is part of a larger effort in Washington to rein in the cryptocurrency market.

Chairman Gary Gensler has requested that crypto exchanges register with the agency. Since early January, the SEC has also issued 14 enforcement actions against crypto firms and individuals.

Other exchanges have also clashed with the SEC. They include Kraken, the nation’s second-largest crypto exchange, which reached a $30 million settlement with the SEC after being accused of offering to sell unregistered securities through its crypto staking program.

Coinbase also has a staking program with terms that differ from the Kraken program, and it told Yahoo Finance that it would fight any action against that service. SEC staff, he said in his letter to the agency, “argues that Coinbases’ staking services are investment contracts.”

The story continues

Another exchange, Bittrex, said it would cease operations in the United States at the end of March two weeks before the SEC issues a lawsuit against the company for not registering as a national exchange. securities.

Armstrong, in his video Thursday, said he was ready to fight the SEC in court. Its chief legal officer, who also appeared in the video, said the company is also willing to come to the SEC office at any time to find a viable future for the crypto industry in the United States.

In the company’s written response to the agency, Coinbase said the threat of litigation by the SEC “appears intended to pressure” the company into accepting the agency’s view that all digital assets on the Coinbase platform are securities. This, he said, would mean an overhaul of his business model.

“None of these purposes are supported by law or within the authority of the commissions,” Coinbase said.

Click here for the latest stock market news and in-depth analysis, including events moving stocks

Read the latest financial and business news from Yahoo Finance

[ad_2]