Cramer blasts Coinbase CEO over SEC tweets: 'You can't go to war with the regulators'

Published Wed, Sep 8 202110:30 AM EDT

CNBC's Jim Cramer criticized Coinbase CEO Brian Armstrong on Wednesday after the executive pushed back against a regulator's warning about the crypto company's proposed lending product. Armstrong said on Twitter on Tuesday night that the Securities and Exchange Commission had been acting " sketchy " in warning Coinbase not to launch its new product. Cramer said on Wednesday's " Squawk on the Street " that the CEO's tweets were "shameful" and that he should retract the comments. "I think this shows a contempt for the regulators that is not right. I think that these are people in government who are serving and doing a very good job, and to trash them publicly on Twitter and on air, is not just ill advised but it's saying, 'Listen, we want war,'" Cramer said. "You can't go to war with the regulators. They're always going to have the last word." Lending and staking products have popped up across the crypto world over the past few years, offering users a way to potentially earn yield or rewards from their holdings. However, Armstrong said that the SEC deemed Coinbase's proposed lending product to be a security, told the company it might be sued if it launched the service, and then refused to meet with Coinbase's leadership. Cramer said the decision to publicly criticize the SEC was "one of the most stupid things I've ever seen" and compared it unfavorably with Tesla CEO Elon Musk's confrontations with the regulator . "I don't know who Armstrong's lawyers, but this is more stupid than what Musk did," Cramer said. Politicians and regulators in Washington have been working on how to regulate cryptocurrencies and which agencies should be responsible. New SEC Chair Gary Gensler, who previously taught a class about crypto and blockchain at the Massachusetts Institute of Technology, has called for more investor protections broadly and for Congress to give the commission more power to oversee digital assets . In a series of tweets , Armstrong pointed to similar lending products from other crypto companies as a reason that the SEC was being unreasonable. "Ostensibly the SEC's goal is to protect investors and create fair markets. So who are they protecting here and where is the harm? People seem pretty happy to be earning yield on these various products, across lots of other crypto companies," Armstrong said. Shares of Coinbase, which went public in a blockbuster direct listing in April, were down more than 3% in early trading on Wednesday. On its first day of trading, the stock rocketed to an all-time high of $429.54 before closing about $100 lower than that. Coinbase shares have seen their fortunes go up and down with the volatile price of bitcoin . The stock was trading just above its debut reference price of $250.

Jim Cramer

Scott Mlyn | CNBC

CNBC's Jim Cramer criticized Coinbase CEO Brian Armstrong on Wednesday after the executive pushed back against a regulator's warning about the crypto company's proposed lending product.