Jul 31, 2023

The Financial Times spoke with Coinbase CEO Brian Armstrong and the crypto exchange leader said the SEC recommendation left them no choice but to head to court.

Video transcript

The SEC had asked Coinbase to stop trading. Um Everything besides Bitcoin and quick recap of what is actually happening. Ladies and gentlemen, the SEC charged Coinbase with violating federal securities laws, alleged it was operating as a broker exchange and clearing house for unregistered securities, 13 crypto assets, but not Bitcoin. Um but um coin base also offers over 200 different tokens besides Bitcoin. So they just kind of took a dart through it at 13 and called them, um, secured unregistered securities. Um, coin based said that the S ECs actions violated due process and constitutes in an abuse of discretion. And the latest, the SEC asked them to stop trading all cryptocurrencies other than Bitcoin prior to suing the exchange. So it's kind of not news but it is news, but it is um also probably the biggest thing for me here is that coin shares fell around 10% on this news price has since recovered. But to me, that kind of sounds like a market manipulation. It kind of sounds that the SEC shouldn't have approved coin base application to go public if they were gonna slam their entire business model in the future but what do I know? I'm just an idiot on the internet. I wanna say um Zach's hand was up first. Yeah, I mean, I think this, you know, first of all, this is all attributed to Brian Armstrong, right? CEO saying this um definitely sort of an escalation, I think in the war of words between sec chair, Gary Ginzler and uh coin based CEO Brian Armstrong. Uh But this definitely like lend some credence to what people in the space had been hearing out of the sec and Gary Gusler personal view that all things but Bitcoin were not uh were securities, right? And I think maybe we're hearing this from Brian Armstrong, you know, because there's a little bit of uh counterfactual now, Gary Ginzler stance that all things that are not Bitcoin are securities is not looking so great in the wake of the ripple judgment in which that judge at least said, hey, it's not the, it's not the assets themselves. It's the the nature of the transaction in which those assets are involved, right? So suddenly that public statement that Sec Chair Gary Guns has made is not looking so great. So I can understand why Brian Armstrong may see this as an opportune time to put this out there into the public record. So I think that is just worth situating this story in the context of that fight. And also again, the ripple decision which many in the industry saw as not just a partial victory for ripple, but a partial victory for the bigger fight and potentially for coin base. Right. So I think that's the context in which these comments should be viewed. Um But obviously there's all sorts of other stuff to touch on. Uh I'll toss it straight to Jen on that actually. Yeah, I can see why firms in the US are confused when I read these comments from Brian Armstrong. You know, he says that the SEC asked them to delist everything except Bitcoin. And then we have the actual lawsuit brought by the SEC where everything except Bitcoin was not listed as a security. I think there were about a dozen tokens listed there. And so that's already contradictory. I want to get the Se C's comments in that were noted in the Financial Times article. They said in the course of an investigation, the staff may, may share its own view as to what conduct, what conduct may raise questions for the commission under the securities law. Uh I think that's interesting, right. So they're saying each individual um person from the SEC can share their own views, but that may not be the overarching view of the SEC that becomes very confusing, right? And comes back to the need for clear rules, clear guidelines. Wendy's sig I think encapsulates this beautifully. It is as more and more information comes out. It's very easy to see why Coinbase and other firms in the US are confused because the people that they're dealing with from the SEC may share a view that is not more broadly shared at the sec. Someone else may come in and say something completely different and, and we have a back and forth where we can't actually get any clarity. We, we can't move forward. There are businesses like coin base who, um, you know, are publicly listed, who are saying like we were doing everything right or so we thought, but now we're not and now we're being sued. And so I don't know, it's just, I want to sign now Wendy, you're getting, I'm getting sued sued. We're getting sued suing of the sue of the sue, a big lawsuit at the end of the show. So stick around for that one good news there. Maybe possible. Uh No, I agree with you guys are saying this reminded me of what happened with Patrick mchenry and Gary Gez believe a month or two months ago when Gary Geer went before Congress talking about, uh how they need more funding for the sec and Patrick M Henry really grilled, uh Gary Gez at the time talking about Ethan saying like, is this a security or is it not? And they went back and forth for quite a while, became sort of a viral clip. And the basis of that again is like, is anything besides Bitcoin security in the eyes of Gary Ginzler? Obviously, it seems to be a split house within the se I have one opinion. Some of the chairman such as Hester Purse or crypto mom definitely have their own opinion. And then there's this opinion from Gary Ginzler on Bitcoin where he said in multiple interviews that he thinks only Bitcoin is a nonsecurity crypto asset. So that just makes it very confusing for all these companies who are trying to build in the space. Uh We just continue to see tweets of people moving overseas because they don't want to deal with all the stuff that's happening within the United States.

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