Coinbase announced its 4% savings product on stablecoins in June. Surprisingly, Coinbase has been warned by the SEC that it will sue them if they continue to move forward with their Lend product.
1/ Some really sketchy behavior coming out of the SEC recently.
— Brian Armstrong (@brian_armstrong) September 8, 2021
The Securities and Exchange Commission warned Coinbase that it could be sued if they move forward with their plan to offer a product known as “Lend”, which would pay stablecoin holders 4% interest on savings. This unexpected move is a setback to Coinbase and could pose a problem for other companies that offer high-yielding cryptocurrency products.
Coinbase CEO, Brain Armstrong writes:
“SEC responded by telling us this lend feature is a security. Ok – seems strange, how can lending be a security? So we ask the SEC to help us understand and share their view. We always make an effort to work proactively with regulators, and keep an open mind.
They refuse to tell us why they think it’s a security, and instead subpoena a bunch of records from us (we comply), demand testimony from our employees (we comply), and then tell us they will be suing us if we proceed to launch, with zero explanation as to why.
we’re committed to following the law. Sometimes the law is unclear. So if the SEC wants to publish guidance, we are also happy to follow that (it’s nice if you actually enforce it evenly across the industry equally btw).”
Brain Armstrong says that it is highly unfair treatment by SEC as other companies are offering lending products for years.
“Meanwhile, plenty of other crypto companies continue to offer a lend feature, but Coinbase is somehow not allowed to.
If you don’t want this activity, then simply publish your position, in writing, and enforce it evenly across the industry.
by preventing Coinbase from launching the same thing that other companies already have live, they’re creating an unfair market.”
Armstrong stated that Gary Gensler, chairman of the SEC, was the only regulator who refused meet him in Washington, D.C. when the exchange went public in April.
“The SEC was the only regulator that refused to meet with me, saying “we’re not meeting with any crypto companies“. This was right after we became the first crypto company to go public in the U.S.”
Paul Grewal, a Coinbase chief lawyer says that Coinbase has already received a Wells Notice from the SEC.