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Coinbase walks back Brian Armstrong’s assertion SEC asked exchange to delist every token but Bitcoin

Coinbase walks back Brian Armstrong’s assertion SEC asked exchange to delist every token but Bitcoin
Coinbase was never ordered to halt trading, spokesperson tells DL News.
  • Armstrong reportedly said the SEC made the request before filing a lawsuit against the exchange in June.
  • Coinbase tells DL News an article in The Financial Times omitted ‘important context.’
  • SEC tells DL News it doesn’t ask firms to delist cryptocurrencies.

Coinbase CEO Brian Armstrong has never been shy about airing his views on what he once called “sketchy behaviour” by the US Securities and Exchange Commission.

But on Monday, Coinbase scrambled to walk back his latest reported bout of criticism. Armstrong said that the SEC had asked the crypto exchange to delist more than 200 tokens before it sued the company in June, according to an article in The Financial Times.

Important context

In a statement made to DL News, a Coinbase spokesman said the FT report was “an inaccurate representation of the facts.”

“The interview as published earlier today by The Financial Times omits important context regarding our conversations with the SEC,” the spokesman said.

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The FT’s press office did not immediately respond to a request for comment by DL News.

The SEC said it does not make such requests.

“SEC staff does not ask companies to delist crypto assets,” an SEC spokesperson told DL News. “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.”

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Latest clash

This is the latest dustup in the long-running legal fight between the top crypto exchange in the US and the government’s most powerful markets regulator.

Armstrong has argued that cryptocurrencies are a unique technology and they should not be treated the same way as stocks or bonds.

SEC Chair Gary Gensler has countered that digital assets behave the same as securities and should comply with 90-year-old laws requiring digital assets to be registered with the agency.

To that end, the SEC sued Coinbase in June, alleging that it failed to register as a securities exchange and broker-dealer, and that virtually all the tokens traded on its platform should also be registered.

READ MORE: How the SEC’s showdown with Coinbase will change the crypto market for everyone

But the FT story added a twist by reporting that the SEC asked Coinbase to delist them before suing.

“They came back to us and they said… we believe every asset other than Bitcoin is a security,” Armstrong told the FT, according to its article. “And we said, well. How are you coming to that conclusion, because that is not our interpretation of the law. And they said, we’re not going to explain it to you, you need to delist every asset other than Bitcoin.”

That didn’t happen, Coinbase told DL News.

Outspoken advocate

“Prior to litigation, the SEC did not at any point request that Coinbase delist any specific assets, which the SEC acknowledges in the same article,” a spokesman for the exchange said.

Armstrong, who co-founded Coinbase in 2012, is an outspoken advocate for the crypto industry. He has not held back in expressing his views in public about the SEC’s crackdown on digital assets. Coinbase has even petitioned a court to force the commission to propose new rules for digital assets.

Gensler, meanwhile, has urged crypto exchanges to just come in and register their platforms or tokens with the SEC the same way that traditional finance outfits do.

READ MORE: Meeting Gensler’s demands — how one crypto firm took the ‘long complicated route’ to register with the SEC

It’s unusual for a CEO to make potentially controversial public comments in the midst of an ongoing court battle. But Armstrong may feel Coinbase is winning a messaging war, as crypto celebrates a run of good news.

Ripple win

In mid-July, a judge ruled as part of a case brought by the SEC against Ripple Labs that Ripple’s XRP token was not an illegal transaction in certain trading contexts. The crypto world read the ruling as a victory, albeit a partial one.

And last week, a bipartisan majority of lawmakers in the US House of Representatives voted to move two crypto-focused bills to the next stage of the legislative process.

READ MORE: ‘Not a warm and fuzzy guy:’ Gary Gensler’s past sheds light on his firm stance on crypto

One of these bills would seek to install trading rules that Armstrong says he wants. He celebrated the vote as a win for “crypto, American innovation, and national security.”

“We continue our discussions with the commission, but believe that transparent and fair rulemaking and congressional action represent the best path forward for American crypto users and the companies building the crypto economy in the US,” the Coinbase spokesman told DL News.

Have a tip on crypto regulation? Contact the authors at joanna@dlnews.com and adam@dlnews.com.