Ex-SEC Official Thinks 'Coinbase Is Next' On The Financial Watchdog's List After Bittrex

Coinbase, the American publicly traded company that runs a centralized cryptocurrency exchange platform of the same name, could be the next in the SEC's list of crypto businesses that will get a taste of its crackdown after the financial regulator slapped Bittrex with a lawsuit this week.

The U.S. Securities and Exchange Commission (SEC) on Monday charged the Seattle-based crypto asset trading platform Bittrex and its former CEO William Shihara "for operating an unregistered national securities exchange."

The financial watchdog has been cracking down on small to large businesses in the cryptocurrency space operating in the U.S. in the form of filing lawsuits against exchanges, and suspending crypto services, as well as products and activities offered by trading platforms.

Following the latest lawsuit filed against Bittrex, John Reed Stark, the former chief of SEC's Office of Internet Enforcement, said that Coinbase could be the next major exchange platform to face the impetus of the supposed anti-crypto campaign of the SEC.

"The SEC has now charged crypto asset trading platforms Beaxy and Bittrex for operating an unregistered national securities exchange, broker, and clearing agency. IMHO, Coinbase is next. Don't shoot the messenger," Sark said in a tweet.

When asked by a Twitter user how is this possible considering that the exchange's business model was "blessed by the SEC when coinbase filed and was approved to be a publicly traded security," Stark said that the "SEC does not 'bless' any business model of any public company, including Coinbase."

The SEC issued a Wells Notice to Coinbase last month, informing the exchange that it intends to sue the platform for allegedly violating a number of investor-protection laws.

In March, Brian Armstrong, the co-founder and current CEO of Coinbase, confirmed the receipt of the notice from the financial regulator and shared his views on the warning the platform received.

Armstrong said Coinbase is prepared to appear before the court defending its name and reputation since they are "right on the law, confident in the facts."

In a Twitter thread, the executive noted that "two years ago the SEC reviewed our business in detail and approved Coinbase to go public. Our S1 clearly explained our asset listing process and included 57 references to staking. Coinbase runs a rigorous asset review process and has rejected more than 90% of assets that have applied to be listed on the platform."

He also noted that Coinbase "is proud to stand up for our customers and the industry in these moments," noting that "the legal process will provide an open and public forum before an unbiased body where we will be able to make clear for all to see that the SEC simply has not been fair, reasonable, or even demonstrated a seriousness of purpose when it comes to its engagement on."