In a 21-part tweet, Co-Founder and CEO of Coinbase, Brian Armstrong, shares his displeasure with his Twitter subscribers. He explains the current situation and emphasizes that Coinbase has been operating within the law so far and intends to continue doing so. Moreover, this is evident from an official blog post.
The SEC classifies the new lend option as a “security”. This is subject to other regulations, which is why the SEC wants to ban Coinbase from offering crypto lending. In a discussion between the two parties that has been going on for some time, Coinbase has asked for a justification of this statement a few times, however, the SEC cannot or will not disclose it.
[The SEC] responded by telling us that this lend feature is a security. Ok – sounds strange, how can a lend be a security? So we ask the SEC to help us understand and share their views.
[The SEC] refused to tell us why they believe it is a security and instead demands a number of documents from us (we complied), demands a deposition from our staff (we complied), and then tells us they will sue us if we proceed with the launch without explaining why.
If Coinbase were to violate the SEC’s rule and integrate crypto lending on their platform anyway, the institution threatens to sue. This is met with even more incomprehension from Armstrong, as there are already a great many SEC institutions that offer lending.