SEC Chairman: Haven't seen such non-compliance in the currency circle in 40 years! Coinbase: Bring it on!

Since the US Securities and Exchange Commission (SEC) sued Coinbase Global, the "first stock of US cryptocurrency exchanges," on Tuesday, June 6, the CEOs of both parties in the strong currency circle and the stronger regulatory agency chairman have taken turns to publicly stage a "verbal battle".

SEC Chairman's Upgrade Confrontation: The Financial Industry Has Been Employed for 40 Years, and I Have Never Seen Such Non-Compliance in the Currency Circle!

Gary Gensler, former Goldman Sachs partner and current SEC chairman, who is known for his quick action and making enemies everywhere during his tenure as chairman of the US Commodity Futures Trading Commission (CFTC) from 2009 to 2014, spoke directly to the media this week:

"I have been working in the financial field for 40 years, and the cryptocurrency industry has so many violations and hype disguised as reality that I have never seen in the financial field.

The cryptocurrency industry really doesn't want to work hard for compliance, and that's our main finding. They must change their business model and may have to disclose things they don't want to disclose."

Under Gensler's leadership, the CFTC resisted litigation pressure from Wall Street companies and improved its supervision of the global swap market. This time, the SEC under his leadership also chose to take enforcement action-oriented or preemptive strategies to deal with mainstream platforms in the currency circle.

On Monday of this week, the SEC filed 13 charges against the world's largest platform, Binance, and its CEO Zhao Changpeng, including mishandling customer funds, misleading investors and regulators, and violating securities rules. The SEC also submitted an emergency action application, requesting a temporary restraining order to freeze Binance's assets for US customers.

On Tuesday, the SEC subsequently sued the largest US platform Coinbase, "operating its cryptocurrency asset trading platform as an unregistered national securities exchange, broker, and clearing agency," and the company's "staking-as-a-service program" was accused of issuing and selling "unregistered securities," and at least 13 tokens were identified as securities.

Coinbase CEO "Hardcore" the US Securities and Exchange Commission: Your Regulatory Rules Are Unclear, and If You Want to Sue, We Will Accompany You!

The management of Coinbase, which has long had "fighting experience" with regulatory agencies such as the SEC, did not hesitate and chose to "hardcore positively." Brian Armstrong, CEO of Coinbase, who co-founded Coinbase in 2012 and was a software engineer for Airbnb, refuted the SEC's lawsuit on Twitter and said, "If we need to use the court to clarify the rules of the currency circle, then come on!" Armstrong responded that the Coinbase team is "confident in both the facts and the law" and is proud to represent the entire cryptocurrency industry in "finally clarifying the regulatory rules of the currency circle" through this lawsuit. His tweet reads as follows:

"Please remember: 1. The SEC reviewed our business and allowed us to become a public company in 2021.

1. We have repeatedly tried to register with the SEC, but the securities regulator has not provided a simple way for cryptocurrency companies to register. Therefore, we do not list securities on the market platform and have rejected most of the reviewed assets."

2. The SEC and CFTC have issued conflicting statements and have not even reached a consensus on the definition of securities and commodities.

3. This is why the US Congress is introducing new legislation to address this issue, and other countries around the world are taking action to establish clear rules to support this technology. The SEC has not issued a clear rulebook and instead regulates by damaging US interests.

Obviously, Coinbase's lawsuit is very different from other lawsuits-the complaints against us are completely focused on the basic concept of what is a security or not. Let's continue to move forward and build an industry. The United States will eventually do the right thing."

This week, Armstrong also accepted interviews with mainstream media and participated in financial industry conferences, and clearly stated that Coinbase will continue to operate as usual and will not stop or re-evaluate the listing qualifications of any tokens mentioned in the SEC complaint before the court makes a ruling.

He said that the platform trades more than 240 cryptocurrencies, and the company's balance sheet has more than $5 billion to maintain operations and pay legal fees: "Even if the lawsuit takes longer, it doesn't matter. I don't think we will have any problems in court."

Since 2021, the SEC has repeatedly wanted to sue Coinbase, and the latter even sued the SEC in April

Interestingly, Coinbase went public on Nasdaq in 2021, claiming to be the only compliant cryptocurrency trading platform in the United States. Gary Gensler also became the chairman of the SEC in 2021.

When he was a professor at MIT teaching cryptocurrency and finance, Gary Gensler praised the underlying technology of Bitcoin's blockchain for making payments cheaper, while believing that most tokens outside of Bitcoin are still "securities," and the business model of the currency circle platform combining exchanges, brokers, and clearinghouses has conflicts of interest. Also starting in 2021, the adversarial relationship between SEC and Coinbase has gradually escalated. In September of that year, SEC wanted to sue Coinbase for its planned cryptocurrency lending program. The latter's CEO publicly tweeted to mock the SEC and increased lobbying efforts to support cryptocurrency policies. Last year, Coinbase also added a feature to its application that rates politicians' cryptocurrency stances.

On March 22 of this year, Coinbase disclosed that it had received a Wells notice from the SEC, indicating that the regulatory agency may take enforcement action. In response, the company issued a statement from its legal team on April 19, stating that the SEC's potential enforcement action is neither legally supported nor within its jurisdiction. On April 25, Coinbase launched an offensive and sued the SEC, claiming that it failed to provide clear rules for cryptocurrency exchanges in a timely manner, including distinguishing whether cryptocurrencies are securities. The SEC attempted to dismiss the lawsuit on May 5 but failed.

In other words, the SEC and Coinbase are currently suing each other and facing separate legal charges, which could be a long and costly "battle."

Analyst: The life and death moment of the cryptocurrency platform has arrived, and if the SEC loses, it will significantly hit the credibility of regulation

The SEC believes that most cryptocurrencies have securities features, meaning that people buy them in the hope of profiting from the efforts of their founders. This means that investors should have the same disclosure rights as those who sell stocks in listed companies. The behavior of cryptocurrency trading platforms should also be more like the New York Stock Exchange. Cryptocurrency platforms believe that SEC rules are meaningless to their business models, and tokens are not securities.

At the same time, there is indeed a conflict between the two regulatory agencies, SEC and CFTC, mainly because SEC, led by Gensler, believes that the second-largest cryptocurrency, Ether, should be considered a security, while CFTC believes that Ether and Bitcoin are both commodities, which fall under CFTC's regulatory purview. CFTC has allowed exchanges under its supervision to launch Ether futures.

Some analysts point out that the SEC's intensive prosecution of mainstream cryptocurrency trading platforms represents a strategic shift under Gensler's leadership. Previously, the SEC focused on suing individual cryptocurrencies, but after 2021, law enforcement officials targeted central institutions that most investors use to buy and sell tokens.

If the SEC wins, it may restrict Americans from buying and selling digital currencies other than Bitcoin and a limited number of tokens recognized by the court as commodities. This has life and death implications for cryptocurrency platforms. If the SEC loses, the government's ability to regulate the cryptocurrency market will be weakened:

"The largest cryptocurrency exchange in the United States has put itself on the front line of a long legal battle, which could lead to earth-shattering changes in the entire industry." Regardless of the outcome, it could be one of the most historically significant decisions in US currency history.

If the operational capabilities of Binance and Coinbase are damaged due to their defeat, it will obviously have a huge impact on the cryptocurrency industry, as both exchanges are so large."

Coinbase "cries" for registration and is cold-shouldered by SEC, Binance claims SEC chairman wants to be the company's advisor

Legal records provided by Coinbase in April showed that representatives of the company had held more than 40 meetings with SEC officials before being sued by the SEC, dating back to January 2018.

At some of the meetings, Coinbase shared why it believed certain tokens could be safely listed or explained how other products worked. It is reported that these meetings suddenly stopped in late January of this year after the SEC's enforcement division said it was about to file a lawsuit. Coinbase had requested a meeting with Gensler, but did not receive a positive response.

Coinbase CEO Brian Armstrong said this week that the SEC did indeed hold an online meeting with the company later, when he tried to discuss compliance registration with Coinbase, but received a "quite cold reception." Gensler instructed him to talk to his lawyer.

Binance also released a legal team opinion this week claiming that SEC Chairman Gary Gensler had actively sought to serve as an advisor to the company in March 2019, when he was still a professor at MIT.

They claimed that Gensler had multiple conversations with Binance executives and founder Zhao Changpeng before taking up his SEC position, and had lunch with Zhao Changpeng in Japan. It is said that Gensler had multiple conversations with Zhao Changpeng before joining the SEC and had lunch with him in Japan.

As regulation tightens, Coinbase has threatened to move its headquarters out of the United States, and its stock price has fallen more than 80% since going public.

Wal Street News has mentioned that as early as a month ago, Coinbase CEO Brian Armstrong had threatened to move the company's cryptocurrency trading platform out of the United States, citing increasing regulatory uncertainty in the cryptocurrency industry. Another cryptocurrency exchange, Bittrex, has announced plans to withdraw from the United States by the end of April, citing "current US regulatory and economic conditions."

There are also analyses that Coinbase's token listing decisions were more conservative than other exchanges at first, offering only bitcoin and some tokens considered blue chips in the cryptocurrency world during the token issuance frenzy of 2017. In the following years, due to competition from less regulated offshore markets such as Binance and the now-defunct FTX platform, which collapsed in November last year, Coinbase also opened up to more tokens. On Tuesday, when Coinbase was sued by the SEC, its stock price plummeted by 12%. However, it rebounded slightly in the following two days and rose by more than 3% on Thursday. It also received additional investments from several ETFs, including the flagship fund of "Queen of the Bull Market" Woody Johnson. Despite this, the company has been losing money for five consecutive quarters, and its stock price has fallen by nearly 84% since its listing in 2021. Some people say that Coinbase's difficulties are not just a series of legal lawsuits.

In addition, the SEC spent three years investigating and sued Ripple Labs, the issuer of the third largest cryptocurrency XRP in the world, in December 2020, claiming that it was a security. Ripple Labs said it would spend more than $200 million to fight the charges, and a ruling is expected as early as this summer.

In March of this year, the SEC also formally sued Sun Yuchen, the founder of Tron and a member of Huobi's global advisory committee, accusing him of illegal sale of securities, fraud, and market manipulation, as well as separate violations by his celebrity supporters of cryptocurrency assets.