Coinbase CEO says the crypto exchange is preparing to go to court with the U.S. SEC
Coinbase is preparing for a years-long court battle with the U.S. Securities and Exchange Commission, the company’s chief executive told CNBC Tuesday, after the regulator warned the cryptocurrency exchange of potential violations of securities law.
Last month, the SEC issued Coinbase with a Wells notice, which is often one of the final steps before the regulator formally issues charges. It generally lays out the framework of the regulatory argument and offers the potentially accused an opportunity to rebut the SEC’s claims.
Brian Armstrong, CEO of Coinbase, called the issuing of the Wells notice “unfortunate” and said the company has not got any more information on the specific issues the SEC has.
“We’ve met with them over 30 times in the last year … never got a single piece of feedback from them about what we can be doing better or differently, and then this Wells Notice arrived,” Armstrong told CNBC in an interview.
“I think we’re going to have to actually end up going to court to get the clarity we need and create the case law.”
Case law refers to judicial precedent.
The SEC has ramped up its scrutiny on crypto firms, going after companies it alleges are offering unregistered securities. The SEC is using enforcement actions to target firms.
One of its most high profile lawsuits is with a company called Ripple, which has been going on since 2020. The SEC alleges Ripple sold unregistered securities. Ripple disputes the claim.
When asked by CNBC if Coinbase is prepared for a years-long battle with the SEC, Armstrong replied, “Absolutely.”
“We never seek litigation but it seems in this case they have initiated it and if we need to go to the courts to get the clarity that we need then we are very prepared to do that,” Armstrong said.
The cryptocurrency industry has complained that the SEC has not given companies clarity on what they can and cannot do. The SEC, meanwhile, argues that the rules are clear under existing laws.
Armstrong accused the SEC of an “abdication of responsibility.”
“The regulators’ job is to publish a clear rulebook and allow that market to be safe but also to flourish in that country and I think they’ve completely abdicated responsibility,” Armstrong said.
The SEC was not immediately available for comment when contacted by CNBC.
Brian Armstrong, CEO of Coinbase, slammed the U.S. Securities and Exchange Commission. He also said the cryptocurrency exchange is looking to invest more outside of the U.S.
Carlos Jasso | Bloomberg | Getty Images
Investors in Coinbase, which is listed in the U.S. and whose stock is up around 90% this year, will be watching how the SEC issue plays out. Barclays said in a note this month that “regulatory overhang” on Coinbase’s stock “increased meaningfully” when the SEC issued the Wells notice.
“We think the most onerous outcome could be that, if various crypto assets are deemed securities, Coinbase would therefore need to register as a securities exchange, in order to keep offering trading in those assets,” Barclays added.
“Furthermore, under current securities law, securities exchanges are not permitted to offer services directly to retail customers, and Coinbase could theoretically be forced to separate the exchange and broker portions of the business.”
Coinbase considers relocating from the U.S.
On Tuesday, Armstrong spoke at a fintech event in London. He said said the U.S. “has the potential to be an important market in crypto” but right now is not delivering regulatory clarity. If this goes on, he said, then Coinbase would consider options of investing more abroad, including relocating from the U.S. to elsewhere.
“I think if a number of years go by where we don’t see regulatory clarity around us … we may have to consider investing more elsewhere in the world. Anything including, you know, relocating,” Armstrong said.
He added that the company is “looking at other markets” to invest in beyond the U.S. and was “probably going to invest more” in the U.K., given in its push to position itself as a crypto hub.
“We’re a business … like any business we have a budget and we have to decide where to allocate it. And so that means what products we want to build, but it also means what countries we want to invest it in any given year,” Armstrong told CNBC.
“And with the U.S. kind of lagging a little bit … we are looking at other markets.”
The Datadog stand is being displayed on day one of the AWS Summit Seoul 2024 at the COEX Convention and Exhibition Center in Seoul, South Korea, on May 16, 2024.
Chris Jung | Nurphoto | Getty Images
Datadog shares were up 10% in extended trading on Wednesday after S&P Global said the monitoring software provider will replace Juniper Networks in the S&P 500 U.S. stock index.
S&P Global is making the change effective before the beginning of trading on July 9, according to a statement.
Computer server maker Hewlett Packard Enterprise, also a constituent of the index, said earlier on Wednesday that it had completed its acquisition of Juniper, which makes data center networking hardware. HPE disclosed in a filing that it paid $13.4 billion to Juniper shareholders.
Over the weekend, the two companies reached a settlement with the U.S. Justice Department, which had sued in opposition to the deal. As part of the settlement, HPE agreed to divest its global Instant On campus and branch business.
While tech already makes up an outsized portion of the S&P 500, the index has has been continuously lifting its exposure as the industry expands into more areas of society.
DoorDash was the latest tech company to join during the last rebalancing in March. Cloud software vendor Workday was added in December, and that was preceded earlier in 2024 with the additions of Palantir, Dell, CrowdStrike, GoDaddy and Super Micro Computer.
Stocks often rally when they’re added to a major index, as fund managers need to rebalance their portfolios to reflect the changes.
New York-based Datadog went public in 2019. The company generated $24.6 million in net income on $761.6 million in revenue in the first quarter of 2025, according to a statement. Competitors include Cisco, which bought Splunk last year, as well as Elastic and cloud infrastructure providers such as Amazon and Microsoft.
Datadog has underperformed the broader tech sector so far this year. The stock was down 5.5% as of Wednesday’s close, while the Nasdaq was up 5.6%. Still, with a market cap of $46.6 billion, Datadog’s valuation is significantly higher than the median for that index.
— CNBC’s Ari Levy contributed to this report.
CNBC: Datadog CEO Olivier Pomel on the cloud computing outlook
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