EOS, Legal

Why SEC Threatens To Sue Coinbase?

SEC (Security and Exchange Commission) threatens to sue Coinbase over crypto lending products. The New York-based cryptocurrency company, Coinbase, wanted to create the Lend program, which allows some customers to earn interest on assets starting with 4% APY on USDC (USD Coin). They will pay interest on currency that you keep in lend. But SEC denies saying it becomes the security. In reply, Coinbase says the Lend product is not an investment contract or a note and thus cannot be a security.

“The SEC has repeatedly asked our industry to “talk to us come in,” said Coinbase Chief Legal officer in a blog post.” But, he further added, we did that here, but today we all know is that we can either keep Lend off the market without knowing why or they can sue us.

Coinbase CEO Brian Armstrong, in a series of tweets, asks SEC to explain why it believes the Lend feature to be secure. SEC refuses to let the company know why they think the “Lend” feature is secure. Other crypto companies in the market can have the lending feature, while Coinbase cannot, which makes an unfair market.

As mentioned by Coinbase CEO, few companies already offer to Lend features. Many cryptocurrency companies are allowing users to lend their digital coins in return for interest is becoming more common globally. However, regulators have escalated concerns that the products don’t comply with existing securities laws, especially in the US.

What’s ahead?

Coinbase has insisted to SEC that the “Lend” program is not a security. It is also looking forward to clarification and guidance from SEC on why they are restricting Coinbase from launching the same product that other companies are already using. Cryptocurrency Company Coinbase has pushed the product launch to later in October.

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