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“These are all things that law firms are considering every single day and with the size of the companies and the kinds of engagements at stake, you can be talking easily tens if not hundreds of millions of dollars in lost revenue if you bet on the wrong horse,” – Jeffrey Lowe

• Coinbase CEO Armstrong took aim at Milbank’s hire of SEC director
• New Trump administration expected to change approach to crypto

Coinbase Global Inc. is warning its law firms not to hire any anti-crypto government lawyers or risk losing the company’s work in what could be a sign of things to come for Biden administration attorneys.

Coinbase CEO Brian Armstrong wrote in a post on X on Dec. 2 that “we’ve let all the law firms we work with know, that if they hire anyone who committed these bad deeds in the (soon to be) prior administration, we will no longer be a client of theirs.”

Armstrong then singled out Milbank LLP’s hire of Gurbir Grewal in October, who was the former enforcement director of the US Securities and Exchange Commission, saying the firm “messed up” while noting that “we don’t work with them now (and never will while he works there).”

Grewal, the former New Jersey attorney general, joined the SEC in 2021 and led the agency’s stepped-up enforcement against the cryptocurrency industry. The agency filed more than 100 actions, including ones against Coinbase, Binance, Kraken and Gemini.

The value of Armstrong’s message is to communicate directly to those firms that are not yet on Coinbase’s roster that this is a consideration that they should bear in mind when they’re when they’re recruiting people to their firm, Paul Grewal, the company’s general counsel, said in an interview.

Coinbase’s Grewal said he hoped Armstrong’s tweet “does provoke a wider conversation among industry leaders about the revolving door in Washington and the historic assumption that lawyers in government can essentially do what they want without any consequence.”

No ‘Animus’

At a New York City Bar Association panel Tuesday, Gurbir Grewal acknowledged the tense relationship between the crypto community and Gary Gensler’s SEC.

“The thing to make clear here is none of our work here was motivated by an animus toward an industry or to pick winners or losers,” Grewal said. “We took a certain approach and there’s been a tremendous amount of frustration with that approach.”

“While we broadened the number of actions, there don’t seem to be a lot of off-ramps for resolutions,” he said.

Coinbase was founded in 2012 by Armstrong and Fred Ehrsam and has become the biggest crypto exchange in the US.

Coinbase was charged in June 2023 for operating a trading platform without registering with the SEC as a broker. Coinbase sued the SEC last year demanding new rulemaking for digital assets following a denied petition filed by Coinbase in 2022. Gibson Dunn & Crutcher’s Eugene Scalia represented Coinbase in its appeal.

“Let your law firms know that hiring these folks means losing you as a client,” Armstrong said.

However, President-elect Trump has taken a more favorable posture toward the crypto industry and is expected to pull back the SEC’s aggressive pursuit of the digital asset space.

Grewal and Milbank did not immediately respond to a request for comment.

‘Wrong Horse’

Threats like Coinbase’s aren’t anything new, but making a public statement about it is unusual, said Washington-based legal recruiter Jeffrey Lowe at CenterPeak.

“It might be something that a client will be telling its law firms privately, but to just put it out there just really draws a line in the sand,” he said.

Firms know when they hire certain people, whether they’re from an administration, a different firm, or a competing company know that they run a risk of there being a perceived business conflict with other potential clients out there, Lowe said.

“Which position do we want to take? Do we want to be pro Google, or do we want to be pro Amazon or pro Apple or Samsung?” Lowe said.

“These are all things that law firms are considering every single day and with the size of the companies and the kinds of engagements at stake, you can be talking easily tens if not hundreds of millions of dollars in lost revenue if you bet on the wrong horse,” he said.