Coinbase CEO Brian Armstrong urged decentralized finance (DeFi) companies hit by Commodity Futures Trading Commission (CFTC) legal action to fight back with countersuits.
Armstrong’s comments on the social media platform X came after the CFTC announced fines for multiple DeFi protocols on September 7 as it ratchets up enforcement against companies in the sector.
The CFTC should not be taking legal action against such companies because they are not financial service businesses, he said, adding that it’s highly unlikely the Commodity Exchange Act even applies to them.
“My hope is these DeFi protocols take these cases to court to establish precedent,” he said. “The courts have proven to be very willing to uphold rule of law.”
The CFTC should not be creating enforcement actions against decentralized (DeFi) protocols. These are not financial service businesses, and it’s highly unlikely the Commodity Exchange Act even applies to them.
My hope is these DeFi protocols take these cases to court to…
— Brian Armstrong 🛡️ (@brian_armstrong) September 13, 2023
Three DeFi Firms Fined
The agency issued three orders simultaneously, filing and settling charges against DeFi firms Opyn, ZeroEx, and Deridex. Deridex and Opyn were charged with failing to register properly and all three were also charged with illegally offering leveraged and margined retail commodity transactions in digital assets.
Opyn was fined $250,000, ZeroEx $200,000 and Deridex $100,000.
Coinbase Says Lack Of Regulatory Clarity Is Forcing Companies Overseas
“The only thing this is accomplishing is to push an important industry offshore,” Armstrong said.
He has suggested previously that Coinbase may contemplate shifting its operations outside the United States if there is no progress clarifying the industry’s regulatory landscape.
With Coinbase also facing legal action brought against it by the Securities and Exchange Commission (SEC) in early June 2023, Armstrong understands first-hand what it is like to try and run a crypto business in an environment that lacks regulatory clarity. In a blog post on Monday, Coinbase detailed how much damage is being done to the US via a regulation-by-enforcement strategy.
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