Coinbase says SEC is dropping its lawsuit, ‘righting a major wrong’ for crypto

Simone Del Rosario:

President Donald Trump’s Securities and Exchange Commission is ready to drop a case against cryptocurrency exchange Coinbase.

Brian Armstrong:

This is a huge day for us and also for the 50 million Americans who hold crypto the whole crypto industry in the world

Simone Del Rosario:

Coinbase announced the news on Friday, saying SEC staff agreed to drop the case, quote, “righting a major wrong.”

It’s one way Trump is following through on his crypto campaign promises.

Donald Trump:

The United States will be the crypto capital of the planet and the Bitcoin superpower of the world. And we’ll get it done.

Simone Del Rosario:

Back in 2023, the SEC sued Coinbase for operating as an unregistered broker and exchange.

The regulator alleged at the time, the exchange had “for years defied the regulatory structures and evaded the disclosure requirements” of securities law.

The case hinged on the SEC’s belief that while Bitcoin is not a security, pretty much every other crypto asset is. President Joe Biden’s SEC also sued Binance for related infractions, but a federal judge put the case on hold last week. She cited the SEC’s new crypto task force which may impact rules related to the case.

During the Biden administration, SEC Chair Gary Gensler laid out his concerns.

Gary Gensler:

The investing public has the benefit of the US. Securities laws. Crypto should be no different. And these platforms, these intermediaries, need to come into compliance and protect the investing public.

Simone Del Rosario:

The crypto industry is calling for new rules for the new-ish sector. Coinbase CEO Brian Armstrong explained his perspective of the case on CNBC Friday morning.

Brian Armstrong:

In 2023 they came to us and said, We think you’re trading securities on your platform. But the problem with that is, if you go back to just a few years prior, we had gone public, we had explained everything about our business to the SEC. They asked us a million questions. They knew exactly what our listing process was and how we took a very conservative approach. And then a few years later, the political climate changed, and they suddenly changed their mind.

Simone Del Rosario:

Armstrong said it’s up to regulators to publish clear rules the industry can then follow. He called the case bogus, and said had the SEC won, it could have been the end of the crypto industry in America.

Gary Gensler:

These trading platforms, they call themselves exchanges, are co mingling a number of functions, which in traditional finance we don’t see the New York Stock Exchange also operating a hedge fund, making markets, and as we alleged in Binance, having a sister organization flooding the platform with transactions called wash trading. And the lack of controls on the platforms is really a web of deception and conflicts.

Simone Del Rosario:

Gensler’s philosophy on crypto exchanges walked out the door with him when Trump took office.

Donald Trump:

On day one I will fire Gary Gensler and hire a new SEC chairman. I didn’t know he was that unpopular.

Simone Del Rosario:

Trump didn’t actually fire Gensler, he resigned on his own accord. The president nominated Paul Atkins to serve as the next head of the SEC. In December, Trump said,

“Paul is a proven leader for common sense regulations … He also recognizes that digital assets & other innovations are crucial to Making America Greater than Ever Before.”

To officially drop the case against Coinbase, SEC commissioners will need to hold a vote.

Brian Armstrong:

I think it’s a really important signal that this small group of activists in this prior administration who tried to unlawfully attack this industry were going to be able to turn the page on that and finally get some regulatory clarity in America.

Simone Del Rosario:

The Senate banking committee has yet to schedule a confirmation hearing for Atkins.