SEC Asked Coinbase to Stop Trading in all Cryptocurrencies Other Than Bitcoin Before Suing: Report

The United States Securities and Exchange Commission (SEC) asked cryptocurrency exchange Coinbase to stop trading in all cryptocurrencies other than bitcoin (BTC) prior to suing the exchange, according to a report of the Financial Times which cited Coinbase CEO Brian Armstrong.

Armstrong told FT that “the SEC made the recommendation before launching legal action against the Nasdaq-listed company last month for failing to register as a broker,” the report said.

On June 6, the SEC charged Coinbase with breaching federal securities law alleging that it was simultaneously operating as a broker, an exchange and a clearinghouse for unregistered securities – namely, 13 different cryptocurrencies but not bitcoin. Coinbase shot back saying the SEC’s action violates due process and constitutes an abuse of discretion. Coinbase and the SEC are now embattled in a legal process, even as Ripple scored a partial victory in a case against the SEC, ruling that Ripple’s XRP token is not a security.

“They came back to us, and they said . . . we believe every asset other than bitcoin is a security,” Armstrong said according to the FT. “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.”

Armstrong said the SEC recommendation left us no choice but to head to court.

The SEC told the FT its enforcement division did not make formal requests for “companies to delist crypto assets.”

“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,” it added, according to the FT report.

The SEC and Coinbase didn’t immediately respond to CoinDesk’s requests for comment.