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- The Securities and Exchange Commission asked Coinbase to delist over 200 crypto assets, CEO Brian Armstrong said.
- He told the Financial Times that the only token that wasn't targeted was bitcoin.
- Armstrong said that complying would spell the end of the crypto industry in the US.
Before the US Securities and Exchange Commission took Coinbase to court, the regulator asked the crypto-exchange platform to delist all tokens but bitcoin, CEO Brian Armstrong disclosed to the Financial Times.
If Coinbase followed through, the recommendation would have halted the trading of over 200 crypto assets. The SEC request was made on the argument that, aside from bitcoin, each of the cryptocurrencies was an unregistered security.
"We said, well how are you coming to that conclusion, because that's not our interpretation of the law," Armstrong told the FT. "And they said, we're not going to explain it to you, you need to delist every asset other than bitcoin."
According to him, delisting virtually all its tokens would have led to the end of the US crypto industry, making the choice of what to do easy, he said: "Let's go to court and find out what the court says."
With Coinbase's failure to comply, the SEC sued the platform in early June, accusing it of not registering as an exchange and listing 13 traded cryptocurrencies the regulator deemed as unregistered securities.
A day prior, it also sued crypto competitor Binance, also citing the unauthorized sale of securities.
The SEC did not respond to an Insider request for comment. It told the FT that its enforcement division made no formal requests for companies to delist crypto assets, but added that, "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."
SEC Chairman Gary Gensler has warned recently that the crypto world is full of "fraud" and "hucksters." Speaking with Bloomberg TV last week, he said that "investors should be aware that it's not only a highly speculative asset class, it's also one that they currently should not assume that they're getting the protections of the securities laws – even though those securities laws apply to many of those tokens."
But in mid-July, the ongoing debate about the nature of crypto assets took a turn against the regulator, when the SEC lost its lawsuit against Ripple's XRP token. Having sued the company in 2020 for failing to register the currency, a US judge said XRP is not a security when sold to the general public but is a security when sold to institutional investors.
Afterwards, shares in XRP skyrocketed 61%, while Coinbase stock rose over 10%.