Brain Armstrong in his recent statement said that SEC is threatening to SUE Coinbase. The United States Securities and Exchange Commission told that they might sue Coinbase over its crypto yield program as SEC sees it as security.
Coinbase CEO, Brian Armstrong labeled SEC behavior as a sketchy one. He further said that crypto exchanged contacted SEC earlier this year and briefed them about the company’s upcoming Lending program. According to this program, investors will get a 4% yield on return on investment of the USD-backed stablecoins.
Brain Armstrong also told that SEC in its brief response statement declared Coinbase’s Lending program as a security rather than treating it as a commodity. Brain Armstrong also added that up till now SEC did not give any explanation on its treatment. SEC also threatened to sue Coinbase in case the Lend Program service being initiated by the exchange.
“They refused to explain why it’s a security rather than a commodity. Instead, they asked for a bundle of documents as a record from us. SEC also demanded testimony from the company’s employees. Moreover, they told us to sue in we moved forward with this. As of now, Coinbase has no information about SEC point of view.”
During a series of tweets, Brain Armstrong said that multiple crypto firms are operating in the market and offering some sort of services to their customers and also asked from SEC about regulatory clarity on the matter. However, SEC remained silent on it. It seems that what Armstrong is saying, seems pretty bad for the crypto industry as a whole.
It is also bad for some other crypto organizations such as BlockFi and Celsius, they already running the lending program successfully. However, BlockFi is also facing investigations in multiple states in the U.S as BlockFi charges a relatively higher rate.
Paul Grewal, chief legal officer of Coinbase, in a blog post published on Wednesday, writing that he is disappointed with SEC’s action against crypto exchange. He questioned the guidelines under which lending features can be treated as a security. He simplified that Lending Program does not mean that customers will be investing money in the program.
They would simply be using the USDC they own on Coinbase. In return, the exchange would charge 4% interest on offering services to their customers. Paul further said that the company must charge 4% interest as the company needs this money to run its global business operations.
Grewal said that SEC has provided Coinbase with the slightest of insight that officials are treating this Lend Program under the light of year’s old Supreme Court judgment on cases called Howey and Reves. The SEC is unable to come up with its assessment and depending on the court’s judgment.