The US SEC has decided to sue Coinbase. The usual thing was that the Commission considered the cryptocurrency profitability program to be a security.
Coinbase CEO Brian Armstrong revealed that the platform approached the Commission in early 2021. The crypto exchange decided to launch the Coinbase Lend program. The essence of this program is that the exchange wants to offer 4% per annum on USDC stablecoin deposits.
The SEC decided that this program is a security, but at the same time did not explain why they identified this. And also the Commission began to threaten with filing an application to the court if the program is launched.
“They refuse to tell us why they think it’s security, and instead they call us a bunch of tapes (we obey), demand testimony from our employees (we obey), and then tell us they’ll sue us if we start launching without giving reasons, ”commented the CEO of the crypto exchange.
At the same time, the man emphasized that similar services operate on the market from other crypto-exchanges. And the Commission should give clear guidance on such programs. Coinbase’s competitors BlockFi and Celsius offer a similar service to their customers.
“Clients will not ‘invest’ in the program, but rather lend out the USDC they hold on the Coinbase platform due to their existing relationship. While Lend customers will receive interest on their participation in the program, we are required to pay this interest regardless of Coinbase’s broader business. They only told us that they were evaluating our loan product through the prism of years of Supreme Court cases called Howey and Reves. The SEC will not share the assessment itself, but only the fact that they made it – commented Paul Greval in Medium, Coinbase’s director of legal affairs.
Earlier, the chairman of the Securities and Exchange Commission, Gary Gensler, suggested that crypto platforms cooperate with the Commission. This will help regulate legal issues in the cryptocurrency market. And when Coinbase decided to start cooperation with the SEC, they reacted negatively to this, without giving a clear answer.
The crypto exchange decided to postpone the launch of the service until about October, as they will wait for a further response from the SEC.