The United States Securities and Exchange Commission has informed Coinbase, the country’s most popular crypto exchange, of its intention to sue.
The SEC served Coinbase with a Wells Notice, an official document alerting a company to the start of legal proceedings, regarding its intention to initiate the loan program. The loan is marketed as a high-interest savings account that allows clients to earn returns on the USDC, a stable coin tied to the price of the dollar, by lending capital to borrowers.
Coinbase said the company had “no idea” why the SEC intended to initiate proceedings and claimed it had engaged constructively with the regulator over the product from loan offered within the last six months.
âDespite Coinbase keeping the loan out of the market and providing detailed information, the SEC still doesn’t explain why it sees a problem,â Paul Grewal, Coinbase’s legal director, wrote in a blog post.
âOn the contrary, they have now told us that if we launch Lend, they intend to continue. Again, we asked if the SEC would share their reasoning with us, and again they refused, âhe added.
The SEC would assess the product through the prism of two Supreme Court cases: Howey of 1946 and Reves of 1990. While Coinbase was offered the opportunity to provide a written defense, Lend Grewal said the exercise would be “Futile” in view of society. does not know the reasons for the SEC’s concerns.
The chairman of the United States Securities and Exchange Commission, Gary Gensler, has repeatedly sounded the alarm bells about crypto products since taking office in April 2021. Gensler wrote to Senator Elizabeth Warren last month to seek additional resources from regulators to protect crypto investors.
Coinbase said it would not be able to launch Lend until at least October despite a considerable waiting list.
Read more: Coinbase Reports Record Second Quarter Revenue of $ 1.9 Billion