Coinbase founder and CEO Brian Armstrong appeared to be throwing shade at Binance and its CEO, Changpeng Zhao, while speaking at a conference in New York City on Thursday.
“We’re engaged with just a civil matter. It’s kind of a technical issue about what is a commodity and what is a security. The court can help get clarity there,” he said, referring to the Securities and Exchange Commission’s recent lawsuit against Coinbase.
“The other issues we’re seeing in the industry are very different—criminal matters,” he continued. “There’s allegations of wash trading, commingling of funds, executives and CEOs being named personally. None of that is really an issue at Coinbase.”
While Armstrong did not name names, the issues he highlighted—wash trading, the commingling of funds, and CEOs being named personally—are all elements of the SEC’s lawsuit against Binance, the world’s largest crypto exchange.
Among the 13 charges levied at the firm, the SEC alleged that Binance’s market maker, the Zhao-owned Sigma Chain, artificially inflated trading volumes on Binance’s U.S. subsidiary. The agency also alleged that Zhao and Binance allowed its platform to “commingle customer assets or divert customer assets as they please.” And, as opposed to the action against Coinbase, Zhao was personally named as a defendant.
While the lawsuit is, like the SEC’s action against Coinbase, a civil case, rumors of a pending Department of Justice indictment against Binance and Zhao have been in the wind for months. And legal and money laundering experts say the crypto billionaire’s connections to dozens of companies linked to his exchange open him up to liability, which is maybe why Armstrong alluded to “criminal matters” on Thursday.
The Coinbase CEO’s comments come months into the SEC’s broader onslaught against the crypto industry in the U.S., which Armstrong and many crypto supporters have said amounts to “regulation by enforcement.”
In addition to Binance and Coinbase, the SEC has litigated against Genesis, Gemini, Kraken, Bittrex, Tron, and Do Kwon, founder of the so-called stablecoin TerraUSD and Terraform Labs, among other firms.
Throughout the SEC’s slew of litigation, Coinbase and its CEO have continually described themselves as the white knights of crypto, members of a publicly traded company that, Armstrong and his staff say, has tried to follow the law to the letter.
“We’ve made every effort to follow the law,” Armstrong said during the conference on Thursday. “Where there is clarity, we’ve gone and got basically every license you can get around the world.”
He added: “That often was a more difficult path. It was a slower path. It was a more expensive path. But I think it’s ultimately proved to be the right path.”
