Coinbase may come into conflict with the SEC (and it doesn’t know why).
In a lengthy Twitter statement, Coinbase CEO Brian Armstrong announced that the US Securities and Exchange Commission (SEC) has threatened to sue the exchange over a lending feature (Lend).
Coinbase was aiming to launch a yield product within a few weeks. Users will be able to earn interest on selected digital assets with this product. From the very beginning, the offer would only include USD Coin (USDC). After reaching out to the SEC, the company learned that the product would be classified as an unregistered security. Armstrong claims he has not disclosed how the regulator made such a decision.
Now, the securities watchdog claims that he will take the company to court if the exchange continues its service with the launch of the said yield feature. In a blog post, Coinbase’s chief legal officer Paul Grewal said that the company has already received a Wells notice and a letter informing buyers of the substance of their accusations.
Grewal adds that a written submission would also be “vain” because he doesn’t know exactly why the company could face a lawsuit:
Coinbase’s confusion comes from the fact that a number of cryptocurrency companies have been offering their own lending features for years. The company hints that it has been unfairly treated by the regulator:
Armstrong claims that such an action would harm investors rather than protect them, as people seem “quite happy” to get returns on their crypto.
Armstrong also said that SEC Chairman Gary Gensler was the only regulator in Washington DC to refuse to meet with him.
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