Who's Afraid of Gary Gensler?  Coinbase Accolades for a Fight

Who’s Afraid of Gary Gensler? Coinbase Accolades for a Fight

If it wasn’t already clear enough that SEC Chairman Gary Gensler considers most crypto tokens to be securities of the many time he has said it, two weeks ago, the SEC started walking instead of just talking. This accused a former Coinbase product manager with insider trading, and in his complaint listed nine specific tokens as unrecorded titles.

This strikes me as the biggest crypto news of the summer so far, with the widest implications for the industry.

The nine tokens are GPARally (RLY), DerivaDEX (DDX), XYORari governance token (TMN), 60Powerledger (POWER), DFXand Chromatic (EXCEPT). The top seven are listed on Coinbase for trading. (DFX and KROM were in an internal Coinbase spreadsheet of tokens it planned to list, but it never did.)

The nine projects behind these tokens have been remarkably quiet in response to the SEC pointing fingers at them. Coinbase did not.

Coinbase replica of a blog post of the legal director Paul Grewal was titled “Coinbase does not list securities. End of story.” Grewal wrote, “None of these assets are securities. Coinbase has a rigorous process to analyze and review each digital asset before making it available on our exchange…this process includes an analysis to determine if the asset can to be considered a Security.”

But of course, that’s not the end of the story. This is just the beginning. Gensler won’t say, “Oh, nevermind, Coinbase says it’s not securities.”

Binance, in response to the SEC token listing, GPA removed, the only one of nine listed on Binance US. He said he was doing it out of “an excess of caution”. This was effective trolling by rival Coinbase, which cannot afford to remove any of the tokens.

The last time the Securities and Exchange Commission came after Coinbase for a specific product or asset was a year ago, when it threatened to sue if Coinbase goes ahead with its planned high-yield loan offering. Around this time, Ripple CEO Brad Garlinghouse, who has been fighting the SEC since 2020, tweeted a “Die Hard” meme to Coinbase CEO Brian Armstrong: “Welcome to the party, buddy“Mark Cuban also urged Armstrong to”go on the offensive.”

But 13 days after the SEC threat, Coinbase relented and drops the product.

This time, the company cannot back down so quickly. Deleting the tokens, a Coinbase source told me, “would undermine our entire position.”

On the same day the SEC labeled nine token securities, Coinbase filed a “petition for regulationcalling on the agency to come up with a new regulatory framework for digital assets. Coinbase rival FTX wants the same; all exchanges do.

In an interview with FTX CEO Sam Bankman-Fried on Friday for the next installment of our gm podcastI asked about the nine tokens.

“What I would most like to see are regulatory frameworks, registration form frameworks, both for platforms and assets, and I am optimistic that over the next year we we’ll see it from multiple agencies,” he said. “It doesn’t mean you can’t make decisions in the meantime. It doesn’t put you in a position where it’s impossible to judge anything… and it’s very intentionally that we’ve listed less more tokens on FTX US than many platforms.”

It feels like a shady touch at Coinbase for listing so many tokens in the first place, a strategy that has earned the company plenty of criticism for opening its floodgates to so many “shitcoins.” But now Coinbase must maintain its approach and challenge Gensler on behalf of its peers.

Stay up to date with crypto news, get daily updates in your inbox.

Related Posts

Leave a Reply

Your email address will not be published.