SEC Asked Coinbase to Delist All Crypto Assets Except Bitcoin, Before Lawsuit

Coinbase chief and CEO Brian Armstrong has come out all open regarding how the U.S. Securities and Exchange Commission (SEC) has been trying to arm twist the crypto exchange for its crypto trading listing.

During his recent interview with Financial Times, Armstrong noted that the SEC asked Coinbase to delist all cryptocurrencies trading on the exchange, except for Bitcoin. Speaking to Financial Times, 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”.

This development took place before the US SEC slapped a lawsuit on crypto exchange Coinbase in early June. On June 6, the SEC accused Coinbase of violating federal securities law by functioning as a broker, exchange, and clearinghouse for unregistered securities, except for bitcoin.

In response, Coinbase argued that the SEC's actions were unfair and constituted an abuse of discretion. This has led to a legal battle between Coinbase and the SEC. Meanwhile, Ripple achieved a partial victory in its case against the SEC, with the court ruling that Ripple's XRP token is not a security.

The Coinbase CEO said: “They came back to us, and they said [. . .] we believe every asset other than bitcoin is a security. And, we said, well how are you coming to that conclusion, because that’s 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.”

The Coinbase chief further added that had the crypto exchange succumbed to the SEC’s request, it would have set a wrong precedence and might have brought every crypto firm operating in America under the purview of SEC’s regulations. Armstrong stated that due to the SEC's recommendation, they had no other option but to take the matter to court.

The SEC clarified that its enforcement division did not formally request companies to delist crypto assets. However, during investigations, the staff may share their views on conduct that could raise concerns under securities laws. SEC Chair Gary Gensler previously indicated that all cryptocurrencies, except for bitcoin, are considered securities.

Armstrong's statements suggest that the SEC viewed Ether as a security before suing Coinbase. It's important to note that Gensler, the SEC commissioners, and staff may have different opinions on certain matters, and their views may not always represent the official position of the institution unless explicitly stated.