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.
“They refuse to tell us why they think it’s a security and instead they get a bunch of record subpoenas from us (we sleep), they demand testimony from our employees (we sleep), and then they say they’re going to sue us if we keep launching it. And with zero explanation as to why.”
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:
“The SEC repeatedly said talk to us, come in. We’ve always done this. But all we know today is that we can keep Lend off the market indefinitely without knowing why, or he could be sued.”
Tort
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:
“Other crypto companies have had loan products on the market for years, and new loan products continue to be launched.”
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.
Risk Disclosure: The articles and articles on Arover.net do not constitute investment advice. Bitcoin and cryptocurrencies are high-risk assets, and you should do your due diligence and do your own research before investing in these currencies.
