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Coinbase CEO Brian Armstrong is confident that his fight against federal regulators will benefit the crypto industry regardless of the judge's decision.
For years, the crypto space has operated in a regulatory no-man's land where there is great uncertainty about what is and isn't allowed and which powerful agency in Washington is in charge.
"From our perspective, the goal of this case is to get regulatory clarity," Armstrong told CNN on Wednesday. Whatever the outcome of the case, it is a step towards clarity.
On Tuesday, the Securities and Exchange Commission dealt another blow to the cryptocurrency industry by suing Coinbase, the largest cryptocurrency exchange in the United States. The SEC alleges that Coinbase made billions of dollars by facilitating the sale of crypto assets as an unregistered exchange, denying investors key protections along the way.
In an interview, Armstrong detailed how Coinbase had been "begging" regulators for years to clarify the rules, only to be "met with silence."
"What are the enforcement measures if there isn't a clear set of rules? It doesn't make sense and it doesn't pass the sniff test," the Coinbase CEO said.
"waiting for the ice"
Armstrong questioned SEC chief Gary Gensler's decision to file a lawsuit against his company just 24 hours after the agency accused Binance, the world's largest cryptocurrency exchange, of mismanaging customer funds.
"I think the timing of these exercises back-to-back was ... unfortunate, maybe intentional," Armstrong said. "He's trying to paint an industry with a broad brush and I think people are smart enough to see that."
Armstrong noted that, unlike Binance, the SEC has never charged Coinbase executives or accused the US exchange of mismanaging customer funds.
When asked about his relationship with Gensler, Armstrong described how he tried and failed to meet personally with the chairman of the Securities and Exchange Commission in Washington. The two men then practically met.
“It was kind of a lukewarm reception,” Armstrong said. "I'm a reasonable person we can live with. I've worked with regulators around the world and with other regulators in the United States, both state and federal. Unfortunately, we couldn't get off on the right foot. ."
During the virtual meeting, Armstrong said he expressed his interest in understanding how Coinbase could register with the SEC.
"I said, 'We're here to record. We'd love to work with you. How do we get a deal?' And he said, 'I recommend you talk to your lawyer,'" Armstrong said.
"The US is behind"
The SEC did not respond to a request for comment on Armstrong's comments, but said in a statement on Tuesday that Coinbase willfully violated the law.
"You can't ignore the rules because you don't like them or because you prefer others: The implications for investors are huge," says Gurbir Grewal, director of enforcement at the Securities and Exchange Commission. "According to our complaint, Coinbase was fully aware of the applicability of federal securities laws to its business activities, but willfully refused to comply."
Coinbase and other major players in the crypto space are hoping that Congress will step in to provide the necessary regulatory clarity for the job, which other countries have already provided.
"Europe has passed comprehensive legislation. The United Kingdom is stabilizing. Singapore and Hong Kong are stabilizing there. In fact, the United States is lagging behind. I think Congress recognizes that," Armstrong said.
Asked whether San Francisco-based Coinbase would consider moving to a country with clearer rules and friendlier regulators, Armstrong said uncertainty in the United States could prompt the company to move more investments overseas. But he insisted he wasn't leaving Coinbase.
"Our budget can certainly change. But to be clear, we are the leaders in the US. We are not going anywhere. The US will get the right result. I feel confident with that."
Coinbase's IPO Argument Is 'False'
Coinbase has made it clear that one of its arguments in court will be to claim that regulators, specifically the Securities and Exchange Commission, gave it the green light to go public just two years ago.
"They let us out," Armstrong said. "It's inconsistent. If you go to a meeting with a regulator and disclose all aspects of your business and they don't raise concerns at that point, that's a fact."
However, some securities experts point out that the SEC's IPO process should not be a blessing in disguise for anything a company does.
"Coinbase's argument that the SEC approved the IPO is a sham," Adam Levitin, a law professor at Georgetown University, told CNN via email on Wednesday. "Use as devenir propriétaire d'une voiture ne signifie pas que le vehicule reussit un test d'émissions, obtenir l'approbation de la SEC for un introduction en bourse ne signifie pas qu'une entreprise se conforme par ailleurs sur aux lois federales value of real estate."
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