Coinbase CEO Vows to Cut Ties with Law Firms Tied to Biden Admin’s ‘Bad’ Actors

Coinbase CEO Brian Armstrong has made a bold statement: if law firms hire officials involved in actions harmful to the crypto industry, Coinbase will sever ties with them. His warning comes amidst growing tensions between the crypto sector and U.S. regulators, especially following actions by the Biden administration.

Armstrong’s comments, posted on X, address concerns over the administration’s handling of crypto regulations. He singled out law firm Milbank for hiring former SEC enforcement chief Gurbir Grewal, stating that Coinbase would no longer work with Milbank as long as Grewal remains there.

Coinbase’s Message to Law Firms: No Tolerance for Anti-Crypto Figures

Brian Armstrong’s warning to law firms highlights a critical issue within the crypto industry: the increasing power of regulators over the space. Armstrong specifically mentioned Milbank’s recent hiring of Grewal, who was a significant figure during his tenure at the SEC. As head of the SEC’s Division of Enforcement, Grewal led multiple enforcement actions against cryptocurrency platforms like Coinbase and Binance, accusing them of failing to adhere to securities laws.

Armstrong’s reaction is a direct response to what he sees as a “bad faith” approach to the industry. “We don’t work with them now (and never will while he works there),” he said, reinforcing that Coinbase would not engage with Milbank as long as Grewal remains part of their team. Armstrong’s decision was rooted in what he describes as an ethical violation—he claims that those responsible for undermining the crypto industry had the option to leave their positions but chose to remain in them.

The Crypto Industry’s Growing Frustration with SEC Actions

Under Grewal’s leadership at the SEC, the agency pursued aggressive enforcement actions against crypto platforms, including lawsuits against Coinbase and Binance. These actions claimed that both exchanges were operating as unregistered securities exchanges, failing to comply with federal securities laws.

However, the broader crypto industry pushed back, arguing that the SEC’s tactics amounted to “regulation by enforcement.” Instead of setting clear rules, critics said the SEC imposed regulations through lawsuits, leaving companies uncertain about what was expected of them. Armstrong echoed these frustrations, calling out the SEC for its failure to establish transparent guidelines for the crypto community.

Critics have long complained about the SEC’s broad interpretation of the Howey Test, which the agency uses to classify many crypto tokens as securities. Under this interpretation, even tokens that have different use cases and functions are treated as if they were stocks or bonds, stifling innovation in the process.

Grewal’s Legacy at the SEC: Impact on Crypto Regulation

During his tenure, Grewal was involved in several high-profile cases, including the SEC’s lawsuit against Coinbase, which accused the platform of offering unregistered securities. This case, along with others targeting exchanges and crypto projects, has sparked significant debate over the SEC’s approach to digital assets.

Many in the crypto industry view Grewal’s departure from the SEC as an opportunity for a new direction. Yet, Armstrong’s comments suggest that the scars of his leadership will linger. By cutting ties with Milbank, Armstrong is sending a message to the broader legal community: hire anti-crypto figures, and you risk alienating major players in the digital asset space.

Armstrong Calls on Industry to Take a Stand

Armstrong’s call for action extends beyond Coinbase. He urged other leaders in the crypto industry to adopt a similar stance. By warning law firms that their connections to anti-crypto officials could cost them future business, Armstrong is encouraging the industry to hold the legal sector accountable.

This move is likely to stir up even more discussion within the crypto community, where Armstrong is seen as a figurehead of resistance against regulatory overreach. On social media, many users applauded his stance, with some calling it a much-needed show of leadership at a time when the crypto space is under constant scrutiny.

A Crossroads for the Crypto Industry and U.S. Regulation

The ongoing tension between the U.S. government and the cryptocurrency industry has only intensified in recent years. Armstrong’s decision to cut ties with Milbank is part of a broader pushback against what many see as overreach by the SEC and other regulatory bodies. With figures like Grewal leaving the SEC, some hope that a shift in leadership will lead to a more favorable environment for digital assets.

While the industry waits to see how these regulatory dynamics evolve, Armstrong’s move signals a shift in how crypto leaders are approaching the ongoing battle for regulatory clarity. As other firms watch closely, it may not be long before more executives follow Armstrong’s lead in taking a stand.