It has now been revealed that the SEC is planning to sue Coinbase. The allegation is that the proposed DeFi loans would be a security. A loan, a security? No one needs to understand that at this time. Even Coinbase CEO Brian Armstrong does not understand this action and is puzzled.
SEC files suit against Coinbase over planned lending
Coinbase CEO Brian Armstrong took to Twitter today to defend the SEC’s recent attack against Coinbase. In the tweet, Armstrong writes:
After months of trying to engage with the @SECGov on our proposed Coinbase Lend product, we recently received notice that it intends to take legal action against us. We believe that dialogue is at the heart of good regulation, even if the SEC may not.
In doing so, Armstrong added that crypto assets have been lent out for years to generate returns. In addition, Coinbase posted a record $2 billion in revenue in Q2 and that the company has reached out to the SEC to let them know about its planned Coinbase Lend program.
In addition, a blog post on Coinbase also details what happened. The post is titled, ” The SEC has told us they want to sue us for loans. We don’t know why. Further, Paul Grewal, Chief Legal Officer of Coinsbase, states that the company received a Wells notice that the regulator wants to sue Coinbase.
Is the Lend program now in jeopardy?
The Lend program, which has yet to be rolled out, allows some eligible users in the US to earn 4% annual returns on USDC deposits. However, just recently, the US regulator has massively increased DeFi oversight and considers lending as well as interest income as collateral.
However, one also has to wonder how lending can be seen as collateral and that a lending function is a security. Armstrong and Grewal also wonder about this. In doing so, the SEC arguably refuses to say why they think a lending function is a security. Instead, they want recordsnesses and statements from employees.
Armstrong is also so angry that he accuses the SEC of trying to intimidate. There would be no possibility of clarity, only accusations that no one understands. Lend was actually supposed to launch in October. Now, however, it’s not certain that it ever will.
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