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In a bold move, Coinbase CEO Brian Armstrong has severed ties with law firms that recruit former U.S. Securities and Exchange Commission (SEC) officials known for their hammer-fisted enforcement activities against the cryptocurrency industry.
Armstrong has accused those officials of trying to undermine the industry without setting clear regulatory guidelines.
On Monday, Armstrong posted the company’s position to X (formerly Twitter): “We’ve notified all our legal clients that if they choose to hire lawyers who played a role in the prior administration’s destructive acts against crypto, their firm is done with Coinbase.”
Milbank in the Spotlight
Armstrong’s criticism named Milbank, a New York-based law firm that recently brought on Gurbir Grewal, the former head of the SEC’s Division of Enforcement. Grewal presided over a number of regulatory actions against crypto firms during his time, including legal action against Coinbase and Binance.
“Milbank recently erred by hiring Gurbir. That’s not going to happen, and so we won’t be going to work with them now or in the future as long as he’s there,” Armstrong said.
Criticism of SEC Enforcement
During Grewal’s tenure, the SEC brought more than 100 enforcement actions against members of the crypto industry, a decision the agency said was needed to keep investors safe. Armstrong, though, labeled these measures as excessive and unethical while pointing out the lack of clear rules in the industry.
“Trying to deconstruct an entire industry without proper regulations is unethical,” Armstrong said. He said senior SEC officials, including Grewal, could have resigned if they disagreed with the agency’s way of doing things.
“Many good people resigned from the SEC rather than take these actions. Those who stuck around cannot say they were just following orders.”
A Call for Accountability on Crypto Legal Affiliates
Armstrong took the opportunity to address the wider crypto landscape, calling on companies to rethink their ties to law firms that employed people who, he claims, were involved in what he termed harmful regulatory campaigns.
Also, “let your legal partners know that hiring these folks will cost them your business,” advised Armstrong.
It’s part of a wider frustration within the crypto community, which has long bemoaned what it sees as inconsistent and heavy-handed enforcement by the SEC.
New Leaders in the SEC
They come as the SEC gears up for a major leadership turnover. Chair Gary Gensler, one of the major proponents of tough crypto regulations, will depart his position on January 20, 2025, the same day President-elect Donald Trump takes office.
SEC Commissioner Jaime Lizárraga also revealed his plans to step down on January 17, 2025, due to personal reasons. These departures create the opportunity for the incoming administration to transform the agency, and maybe with it the not-so-balanced approach towards regulating cryptocurrency.
An Industry That Is Taking a Stand
Breaking ties with firms like Milbank makes a bold statement that the crypto space will not shy away from demanding accountability from legal and regulatory institutions.
Armstrong’s choice highlights the rising friction between the industry and regulatory bodies, which many in the industry feel have created an enforcement landscape that is both unfair and ambiguous.
The developments at the SEC could signal a shift in the future for how regulators engage with the crypto industry. Until then, Armstrong’s moves signal an increasing resolve within the industry to demand more fairness and transparency in its dealings with legal partners and regulators alike.
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