Coinbase CEO Says SEC Started to Change ‘Tone’ Last Year

Brian Armstrong, chairman and chief executive officer of Coinbase Global Inc., during an interview in New York, US, on Wednesday, March 1, 2023. Armstrong said crypto can help improve the American financial system and discussed working with lawmakers to come up with a "clear rule book." , Bloomberg

Yueqi Yang and Sonali Basak, Bloomberg News

Jun 7, 2023

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(Bloomberg) -- Coinbase Global Inc. Chief Executive Officer Brian Armstrong said the US Securities and Exchange Commission started to change its “tone” in its questioning of the company last year, before filing its lawsuit against the crypto exchange this week. 

“We had many discussions within the last year when their tone started to change. They started to come to us with more questions about the business, so we were very forthcoming,” Armstrong said in an interview at the Bloomberg Invest conference Wednesday. “Unfortunately we were met with silence.” 

Asked if Coinbase is starting to lose customers or its banking partners, Armstrong said on Bloomberg TV, “so far we haven’t seen any risk of that happening. I think all of our partners have been very thoughtful working with us.”

Shares of Coinbase gained 3.2% to $53.28 as of 1:13 pm in New York on Wednesday, after falling 20% the previous two days. Cathie Wood’s funds boosted their holdings in the crypto firm on Tuesday. 

“I think we’re gonna be fine going to the court,” Armstrong said, noting that the company has more than $5 billion on its balance sheet to sustain operations and pay for legal fees. “Even if this takes some time, that’s OK.” 

Coinbase trades over 200 assets on its platform, and the SEC complaint mentioned just 13 of them as securities, Armstrong said, “so a relatively small percentage of the assets we trade.”

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This week, the SEC widened its crackdown on crypto through a one-two punch against the biggest industry players. On Tuesday, it accused Coinbase of running an illegal exchange. Just a day earlier, the regulator sued rival Binance Holdings Ltd., alleging it mishandled customer funds, misled investors and regulators, and broke securities rules. 

Coinbase is also facing scrutiny from state regulators. Several regulators from California to New Jersey demanded that Coinbase halt its staking service. 

“We are not going to wind down our staking services. As these court cases play out, it’s really business as usual,” Armstrong said.  

(Adds CEO comment from a Bloomberg TV interview and the company’s share price.)

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