Mark Cuban says the SEC is trying to regulate Coinbase through litigation and urges CEO Brian Armstrong to 'go on the offensive'

• Mark Cuban on Wednesday told Coinbase CEO Brian Armstrong to "go on the offensive" against the SEC.
• Cuban's tweet came in reply to a thread by Armstrong laying into the SEC, saying the agency threatened to sue Coinbase.
• James Wo, CEO of digital asset manager DFG, told Insider he thinks Coinbase should take the SEC to court - and that doing so could be beneficial in the long run.

Mark Cuban on Wednesday told Coinbase CEO Brian Armstrong to "go on the offensive" against the Securities and Exchange Commission after the agency threatened to sue the crypto exchange.

"Brian, this is 'regulation via litigation.' They aren't capable of working through this themselves and are afraid of making mistakes in doing so," the billionaire entrepreneur said in a tweet. "You have to go on the offensive."

Cuban's tweet came in reply to a thread by Armstrong laying into the SEC, saying the agency threatened to sue Coinbase if it went ahead with offering a new interest-bearing product called Lend.

"Some really sketchy behavior coming out of the SEC recently," said Armstrong. "Ostensibly the SEC's goal is to protect investors and create fair markets. So who are they protecting here and where is the harm?"

Many in the crypto industry agreed with Cuban. Jerry Brito, a prominent lobbyist, tweeted that Coinbase ought to let the SEC sue the company, and get legal clarity through the courts.

James Wo, CEO of digital asset manager DFG, told Insider he thinks Coinbase should take the SEC to court - and that doing so could be beneficial in the long run.

"I would view this as a short-term conflict between the crypto business and regulators," said Wo, whose firm recently led FTX.US's acquisition of regulated crypto exchange LedgerX. "Without these conflicts, it's hard for regulators to give clear instructions."

"In the long term, all these problems will be solved" once the SEC gives a clearer definition of what is allowed, Wo added.

The SEC under Chairman Gary Gensler has been signaling for months that more crypto regulation is coming. In an August interview with the Financial Times, Gensler said that given crypto's multi-trillion dollar size, it will need a public policy framework like any other industry.