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December 21, 2024
Crypto

Coinbase may face years-long court battle with SEC, CEO warns: Report

By akohad Apr18,2023

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United States cryptocurrency exchange Coinbase is gearing up for a lengthy legal battle with the Securities and Exchange Commission (SEC) after the regulator warned the company of potential securities law violations, CEO Brian Armstrong told CNBC in an interview on April 18.

Coinbase received a Wells notice from the U.S. SEC on March 22, indicating a possible enforcement action. The notice is usually the last step before the regulator files charges. In response, Armstrong expressed disappointment and revealed that the company had not received any clear details from the SEC about the alleged violations. He told CNBC:

“We’ve met with them over 30 times in the last year … never got a single piece of feedback from them about what we can be doing better or differently, and then this Wells Notice arrived. I think we’re going to have to actually end up going to court to get the clarity we need and create the case law.”

Armstrong said his company is prepared for a lengthy battle with the SEC, if necessary. Armstrong explained to CNBC that while litigation is not a preferred outcome, Coinbase may need to go to court to gain the clarity it requires. The CEO also criticized the SEC’s lack of clarity for companies in the crypto industry, accusing the regulator of an “abdication of responsibility” and failing to publish a clear rulebook for the market. 

During a fintech event in London on April 18, Armstrong revealed that Coinbase might consider relocating from the U.S. due to the lack of regulatory clarity. He mentioned that the company is currently looking at other markets, with the United Kingdom being a priority due to its efforts to position itself as a crypto hub.

Related: Coinbase CEO calls for action in electing pro-crypto lawmakers following SEC Wells notice

On April 17, the SEC charged crypto asset trading platform Bittrex and its cofounder and former CEO William Shihara for operating an unregistered national securities exchange, broker, and clearing agency. The regulator also filed a separate charge against Bittrex Global.

The SEC’s former chief of the Office of Internet Enforcement, John Reed Stark, shared on Twitter that in light of the SEC’s recent charges against Bittrex, he believes “Coinbase is next.”