Brian Armstrong: Coinbase Will Cut Ties with Law Firms Employing Crypto-Hostile SEC Officials
On Monday, December 2, 2024, cryptocurrency exchange Coinbase clarified its position on partnerships with law firms that employ former Securities and Exchange Commission (SEC) staff deemed hostile to the crypto sector. CEO Brian Armstrong announced that Coinbase would sever ties with any law firm that hires individuals from the SEC who have previously taken actions against the interests of the cryptocurrency industry.
Armstrong’s warning follows the recent appointment of Gurbir S. Grewal, former Director of the SEC’s Enforcement Division, as a partner at law firm Milbank. Armstrong stated that Coinbase would no longer work with Milbank as long as Grewal remained with the firm. He emphasized that this decision reflects a broader concern within the crypto community about the hiring practices of law firms that appear to disregard the industry’s challenges under the previous SEC leadership and the Biden administration.
In a post on social media platform X, Armstrong conveyed that Coinbase has informed all its partner law firms of this policy. He asserted that hiring individuals who have previously engaged in actions perceived as detrimental to the cryptocurrency sector would lead to the termination of Coinbase’s client relationship. Armstrong highlighted that many partners at these firms seem uninformed about the crypto industry’s position and its ongoing struggles with regulatory bodies.
During his tenure as the SEC’s Enforcement Director, Grewal initiated enforcement actions against several U.S.-based crypto firms, including Coinbase and Kraken, as well as international platforms such as Binance. The SEC’s aggressive regulatory stance has included issuing numerous Wells Notices to crypto companies, signaling potential enforcement actions against them.
SEC Chair Gary Gensler, who has frequently asserted that most cryptocurrencies should be classified as securities, has urged crypto firms to register with the agency. Critics in the crypto sector argue that the existing regulatory framework is incompatible with the unique characteristics of digital assets, rendering registration nearly impossible.
Armstrong characterized the SEC’s approach as an “ethics violation,” accusing the agency of attempting to undermine the crypto industry without providing clear regulatory guidelines. He stated that while he does not support a permanent ban on individuals, the crypto industry should refrain from financially supporting those who have contributed to the sector’s challenges.
In urging other businesses in the crypto space to adopt a similar stance, Armstrong called for collective action to hold law firms accountable for their hiring decisions concerning former SEC officials.
