SEC Told Coinbase to Stop Trading in all Cryptos Except Bitcoin Before Suing

The U.S. Securities and Exchange Commission (SEC) had asked Coinbase (COIN) to stop trading in all cryptocurrencies other than bitcoin (BTC) prior to suing the crypto exchange, according to a Financial Times report, citing Coinbase CEO Brian Armstrong.

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.

SEC Chair Gary Gensler, the four SEC commissioners and SEC staff have had different opinions on matters and don't necessarily reflect the institution's position unless expressed as so.

“The interview as published earlier today by the Financial Times omitted critical context regarding our conversations with the SEC in the U.S.," a Coinbase spokesperson told CoinDesk in an email. "Whether deliberately or as a result of an oversight, the author implied that the SEC ordered Coinbase to 'halt all trading of every crypto asset other than Bitcoin.' As stated by the SEC itself further in the article, its “enforcement division did not make formal requests for “companies to delist crypto assets”.

Coinbase further added that, "the views shared in the FT article may have represented the views of some staff at the time, but did not represent those of the Commission more broadly. We continue our discussions with the Commission.."

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.