Financial Times: SEC demands removal of assets other than Bitcoin before lawsuit; Coinbase and SEC both claim report is inaccurate

Coinbase CEO Brian Armstrong revealed in an interview with the Financial Times that prior to the SEC's formal lawsuit, they had discussed a "settlement agreement" with them, which demanded the removal of all cryptocurrencies other than Bitcoin. Coinbase had no choice but to resort to the courts.

Updated on August 1:

According to a report by Blockworks, both Coinbase and the SEC have stated that the Financial Times article was inaccurate.

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SEC Requires Coinbase to Delist Assets Other Than Bitcoin

Brian Armstrong told the Financial Times that the SEC had requested the removal of over 200 tokens from the platform, apart from Bitcoin, before formally filing a civil lawsuit against Coinbase.

Recap: SEC Files Lawsuit Against Coinbase｜Staking Service is a Weakness, Unregistered Securities More Than Binance, Stock Price Plummets by 20%

SEC: We Won't Explain the Reason

Armstrong shared more of their conversation with the SEC:

SEC: We believe all crypto assets other than Bitcoin are securities.

Coinbase: How did you come to this conclusion? Our legal understanding differs.

SEC: We won't explain it to you. You need to delist all assets other than Bitcoin.

Coinbase: Complying Will End the U.S. Crypto Industry

Armstrong expressed helplessness, stating that if Coinbase were to comply, it would impact other U.S. crypto companies:

We had no choice but to litigate with the SEC. Delisting assets other than Bitcoin is not required by law. If Coinbase agrees, it could set a precedent, implying that unless most U.S. crypto companies register with the SEC, they are operating illegally, which essentially means the end of the U.S. crypto industry. However, this leaves us with a simple choice – we will seek justice in court and see what the judiciary decides.

SEC: No Formal Request for Delisting

The SEC responded to the matter in the Financial Times:

The enforcement division did not formally request the platform to delist crypto assets. During the investigation process, SEC staff may express opinions on certain behaviors based on securities laws.

However, the SEC declined to comment on Armstrong's mention of a "settlement agreement."

The veracity of Armstrong's statements remains to be clarified. Nevertheless, the article also quoted Charley Cooper, former aide to the CFTC, with a high probability:

Many U.S. crypto companies have assumed that these cryptocurrencies are not securities when building their business models. If they are told otherwise, many companies would have to shut down immediately.

Both Coinbase and SEC Deny the Reports

Coinbase: No Request to Delist Assets

A Coinbase spokesperson stated that the SEC never requested the delisting of specific assets. Such requests can only be made after a vote by SEC commissioners, and the Financial Times may have quoted views of some SEC staff, which do not represent SEC's orders.

SEC: Will Not Directly Request Companies to Delist Cryptocurrencies

An SEC spokesperson mentioned that during the investigation process, SEC staff may express opinions on certain behaviors based on securities laws, but they will not require companies to delist cryptocurrencies.