The CEO of Coinbase revealed yesterday that the main regulator had threatened to sue the exchange if it continued to work on its crypto lending program.
Coinbase CEO Brian Armstrong had a lot to say on his Twitter account Tuesday in reply to the SEC’s conduct regarding the yield product soon to be launched by the exchange platform. As several players in the cryptocurrency industry move more and more toward the ability for their customers to lend crypto assets in order to earn income, Coinbase announced earlier this year that it will launch its own product from yield called Lend.
The product would be based on USDC, and users could earn up to 4% Annual Percentage Return (APY). The now-publicly traded platform touted the product as a product that would allow users to earn up to 50 times the average interest rate, which is 0.07%. She also revealed that high interest rates did not pose any increased risks, as clients’ savings were backed by a guarantee.
With the product launch slated for a few weeks, Coinbase informed the SEC, which Armstrong said was not very welcoming. The agency said the Lend feature was a security without offering any explanation for this point of view.
“They refuse to tell us why they think it’s security, and instead they assign us a bunch of cases (we comply), demand testimony from our employees (we comply), then tell us that they will sue us if we proceed with the launch, with zero explanation as to why. “
Armstrong, who is also a co-founder of the crypto donation organization GiveCrypto, was obviously not impressed with the SEC’s antics, noting that while his company had made an effort to do what was right, the SEC had had use of threats.
The CEO of the exchange was also suspicious of the SEC’s attitude towards crypto, citing an example from earlier in the year when SEC Chairman Gary Gensler flatly refused. to meet him.
Legal Director Paul Grewal found that Coinbase has been in communication with the financial watchdog for six months and that it has also complied with the regulator’s requests. The exchange remained shocked at the SEC’s intention to sue without a specific explanation – an action it categorized as an unhealthy regulatory relationship.
“A healthy regulatory relationship should never leave the industry in this kind of situation without an explanation,” he wrote.
It remains to be seen what the SEC has planned for the crypto industry and its players. Coinbase joins the list of crypto entities under the radar of the SEC, with others like BlockFi under investigation for illegal offers.
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