雅虎香港財經 Coinbase CEO on SEC lawsuit: 'This will get resolved'
Coinbase Global (COIN) CEO Brian Armstrong spent much of Wednesday pushing back publicly on a new legal challenge from the Securities and Exchange Commission and offering assurances that the firm would get through its current turmoil.
“It's business as usual right now" for Coinbase, he said Wednesday evening at a Piper Sandler event. “This will get resolved,” he added.
The SEC alleged in its case that Coinbase, the largest crypto exchange in the US, violated securities laws by acting as an exchange, a broker and a clearing agency without registering with the agency. The SEC also said Coinbase offered and sold securities without registering its offers and sales.
Armstrong challenged that view at the Piper Sandler event and during separate TV appearances on CNBC and CNN, saying the SEC ignored Coinbase for years despite attempts to work through the regulator's concerns or get clarity about the rules.
“I don't really think there is a way to register, there's basically no way to do it. We've tried repeatedly in the US,” Armstrong said at the Piper Sandler event.
Coinbase, he said, met with the SEC 30 different times. “Frankly, we got a bit of an icy reception,” Armstrong said of the first of those meetings.
When Armstrong asked the SEC how Coinbase should come into regulatory compliance, he said the response was that the agency would not give Coinbase legal advice and that it should talk to its lawyers.
Coinbase's stock rose 3.2% Wednesday.
In a CNBC interview, Armstrong called the US crypto regulatory landscape “an outlier” among countries. He pointed to conflicting views between the SEC and Commodities Futures Trading Commission about which agency should regulate the spot crypto market. Neither has jurisdiction written into law.
SEC chair Gary Gensler has repeatedly reiterated that crypto firms that either issue or offer the sale of cryptocurrencies that count as securities need to come in and register with the securities regulators or face charges.
The SEC's framework for evaluating digital assets as securities relies on the so-called Howey Test. It can be linked back to a 1946 Supreme Court case dealing with tracts of Florida orange groves sold by W.J. Howey Co. and leased back to the company.
The Supreme Court labeled these leaseback deals as investment contracts, meaning they needed to be registered with the SEC. It also defined what constitutes a security: "an investment of money in a common enterprise with profits to come solely from the efforts of others."
In the SEC’s complaint against Coinbase, it identified 13 different cryptocurrencies traded via the exchange as securities. For offering the sale of those securities, Coinbase violated securities laws, the agency alleges.
Coinbase discloses its own token listing standards on its website, asking applicants Howey test-related questions. The firm says it denies 90% of the applications it receives based on legal standards.
The firm increased the number of cryptocurrencies its lists after 2019, doubling its total listed assets by the end of 2020 then doubling it again by the end of 2021, according to the SEC's legal complaint. During this period, Coinbase listed crypto assets with higher “risk” scores based on a Howey Test-like rating framework it had adopted.
“To realize exponential growth of the Coinbase Platform and boost its own trading profits, Coinbase made the strategic business decision to add crypto assets to the Coinbase Platform even where it recognized the crypto assets had the characteristics of securities,” the SEC alleged.
“There’s nothing voluntary about it,” SEC Chair Gary Gensler said in a Wednesday press briefing with reporters about the securities exchange registration process.
“It's like Casino capitalism or something,” he said of the industry’s unwillingness to register. None of the top 20 major cryptocurrencies by market capitalization have registered with the agency.
Armstrong said “it's business as usual right now" for Coinbase. The firm will continue to allow trading in the assets the SEC alleges are securities.
“This will get resolved,” he added.
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