SEC warned it will sue Coinbase if the exchange goes ahead with its high-interest crypto products and their decision will likely frustrate some consumers that see the company’s planned lend offering as a way to earn 4% interest as we are reading more in today’s Coinbase news.
Coinbase announced its 4% savings product on stablecoins in June and in a surprise move, the SEC warned it will sue Coinbase if it proceeds. The Securities and Exchange Commission warned it will sue if coinbase moves ahead with the plan to offer a new product called Lend that will pay stablecoin owners 4% interest on their savings and this move is a setback for the exchange that could spell more trouble for more companies that offer high yield crypto products.
1/ Some really sketchy behavior coming out of the SEC recently.
— Brian Armstrong (@brian_armstrong) September 8, 2021
Coinbase’s Chief Legal Officer Paul Grewal announced the SEC in a post a few days ago where he described how the company has been in discussions with the SEC about Lend for half the year but that the agency then warned a week ago that it will sue if Coinbase goes ahead with its plan. Coinbase announced plans to launch Lend in June and at the time, the company touted the product as a way for crypto owners to earn far high interest that is higher than the initial one that was offered at regular banks and promised to offer a “peace of mind” guarantee as a substitute for the FDIC insurance that comes along with the traditional interest accounts.
The Lend proposal didn’t appear controversial at the time Coinbase announced it and the high yield product that it described only applied to USDC stablecoins which are aking to cash as a more conservative approach than the likes of BLockFi which has a few months advertised returns of up to 8% on a variety of crypto assets. Coinbase CEO Brian Armstrong lashed out after the SEC announcement and complained that his company tried to do the right thing but that the SEC failed to be transparent about the crypto policies but is instead engaging in intimidation tactics behind closed doors.
— Brad Garlinghouse (@bgarlinghouse) September 8, 2021
Armstrong complained that the SEC failed to enforce the policies and allowed other companies that failed to seek out the agency’s approval in the first place to operate in the future. He also hinted that coin base could choose to fight the SEC in court but described that as a last resort. The developments between Coinbase and the SEC are likely to frustrate the users that don’t have easy access to platforms like the ones Coinbase proposed – Lend.
Preston Byrne is a well-known attorney who tweeted that any product which promises a yield is security by law and will therefore be subject to the SEC regulation. He added that other countries including the UK devised other legal means to facilitate these offerings and that the US should do the same.
DC Forecasts is a leader in many crypto news categories, striving for the highest journalistic standards and abiding by a strict set of editorial policies. If you are interested to offer your expertise or contribute to our news website, feel free to contact us at [email protected]