Coinbase executives on Wednesday defended the company against a lawsuit brought by the U.S. securities regulator, saying the cryptocurrency sector lacks a clear set of guidelines.
The Securities and Exchange Commission (SEC) on Tuesday alleged Coinbase traded at least 13 crypto assets that are securities that should have been registered, including tokens such as Solana, Cardano and Polygon. The agency also said Coinbase was operating as an unregistered exchange, broker and clearinghouse.
“It’s not appropriate for the regulator to come back and do an enforcement action if we don’t have a clear rulebook and clear guidance,” CEO Brian Armstrong said in an interview on CNBC.
“They’re saying everything other than bitcoin is a security. Well, that’s not our interpretation of the law.”
Coinbase has been pushing the SEC to formulate new crypto-specific regulations since last year and in April asked the U.S. Court of Appeals for the Third Circuit to compel the regulator to respond. That court on Tuesday ordered the SEC to provide a response within a week.
Coinbase also sought to distance itself from rival exchange Binance, which was also served with an SEC lawsuit on Monday.
The SEC alleged Binance, the world’s largest cryptocurrency exchange and its founder Changpeng Zhao, also sold cryptocurrency products without registering them as securities.
In addition, it accused Binance and Zhao of artificially inflating trading volumes, diverting customer funds and failing to restrict U.S. customers from its platform.
Coinbase’s Chief Legal Officer Paul Grewal told Reuters late on Tuesday that the two lawsuits are materially different.
“There are no allegations that we did not respect limitations on commingling funds. There were no allegations that we failed to properly segregate any assets or operate our own hedge fund. Things like that just aren’t relevant in our case,” Grewal said.
Binance did not immediately respond to a request for comment.
Coinbase shares rebounded on Wednesday to rise nearly 4.3% to $53.8.
The SEC also filed a motion on Tuesday to freeze assets belonging to Binance’s U.S. affiliate. The holding company of Binance is based in the Cayman Islands.
But Grewal said he was “confident” the SEC wouldn’t take that step in Coinbase’s case.
“The standards that are required for such an asset seizure simply don’t apply in our case,” he said.