Coinbase Global Inc., the cryptocurrency exchange from the US, has got some serious trouble coming at them. The SEC has threatened to sue the remote-first company if the crypto exchange does not immediately stop its plans of launching a program that would allow the traders and investors to earn interest on crypto assets.
A blog post by the company’s chief legal officer says that a Wells notice has been issued to Coinbase by the SEC. The Wells notice is considered to be an official way by which the company is told that it will be sued in court. He also mentioned that this will lead to a subsequent delay in the launch of ‘Lend’, a product that Coinbase has been teasing for quite some time, until at least October.
Also, the CEO of Coinbase, Brian Armstrong expressed his criticism on Twitter against the SEC’s handling of this case. He wrote that he had tried to reach out to them but he was not allowed to have a meeting.
What is the flip side of this “Coin”?
Numerous programs that facilitate earning interest through lending assets are coming more and more into the mainstream all around the world. However, on the other hand, some expert regulators, especially in the US, have found concerns, mentioning that the existing Securities laws should apply to these products as well.
A similar incident has occurred in recent times and it involves BlockFi Inc. This company was ordered in July, to stop their service of providing interest-bearing accounts which have already raised more than $14 billion from various investors.
Grewal also mentioned in his blog that the concern showed by the SEC about Coinbase ‘Lend’ was considering that the SEC believes that the product offered by Coinbase involved some sort of a security issue. However, Grewal made it clear Coinbase does not feel that this is the case at all.
Also, when the Securities and Exchange Commission (SEC) was reached outside of office hours for comment via email, no response was received from their end.
