Per excellent reporting by FT

Before suing Coinbase, the US Securities and Exchange Commission (SEC) requested the exchange to suspend trading in all cryptocurrencies except for bitcoin, signaling the agency's intent to assert regulatory authority over a wider portion of the market.

Brian Armstrong, the CEO of Coinbase, revealed that the SEC made this recommendation before taking legal action against the company, accusing it of failing to register as a broker. In its case, the SEC identified 13 cryptocurrencies offered on Coinbase's platform, mostly lightly traded, as securities, asserting its regulatory jurisdiction over the exchange for offering them to customers.

However, the prior request from the SEC to delist all of the over 200 tokens offered by Coinbase, except for bitcoin, indicates the agency's push for broader authority over the cryptocurrency industry under the leadership of Chair Gary Gensler.

Armstrong stated that the SEC insisted that every asset, except for bitcoin, should be considered a security without providing an explanation for their conclusion, leading Coinbase to have no choice but to face legal action. Compliance with the SEC's request could have set a precedent that would force the majority of American crypto businesses to operate outside the law unless they registered with the commission.

To protect the crypto industry in the US, Coinbase decided to challenge the SEC in court to clarify the legal status of the assets in question and find out what the court's ruling will be.