The US Securities and Exchange Commission (SEC) has told Coinbase Global Inc (COIN.O), owner of the exchange of the same name, that it will sue it if it goes ahead with plans to launch a financial product that allows users to earn interest by lending digital currencies.
The SEC wants to file a lawsuit concerning Coinbase’s activities
In recent days, Coinbase‘s chief legal officer, Paul Grewal, said the company plans to delay the launch of its “Lend” product by a few months.
It is now difficult not to link this to the threat of a lawsuit from the SEC.
Coinbase preferred to leave comments to a post on the company’s blog, with the rather unambiguous title, “The SEC has told us they want to sue us over Lend. We don’t know why.”
Here’s an excerpt from the blog:
“Last Wednesday, after months of effort by Coinbase to engage productively, the SEC gave us what’s called a Wells notice about our planned Coinbase Lend program. A Wells notice is the official way a regulator tells a company that it intends to sue the company in court. As surprised as we were at the SEC’s threat to sue without ever telling us why, we want to be transparent with you about the course of events leading up to it”.
A few minutes later on Twitter, Coinbase CEO Brian Armstrong tweeted a series of messages explaining that he had spent several weeks in May talking to many regulators about his business.
Armstrong accuses the SEC of being the only one who refused the meeting, clearly suggesting a biased attitude towards the company and the crypto world.
The SEC against Ripple
The attitude of the SEC and its very active chairman Gary Gensler, appointed on 18 January 2021 by Donald Trump, in one of his last decisions as acting president, does not seem very favourable to the world of decentralized finance.
In December 2020, the commission, led by Gensler, had opened a lawsuit against Ripple and two of its top executives (major security holders), alleging that they had raised over $1.3 billion through an unregulated digital asset offering.
According to the indictment, Christian Larsen, the company’s co-founder, and Executive Chairman of the Board and former CEO, and Bradley Garlinghouse, the company’s current CEO, allegedly raised capital to fund the company’s business, in an unregistered XRP securities offering.
The SEC’s case against BlockFi and Uniswap
At the beginning of the year, it was the turn of BlockFi, a company that promises high returns in exchange for lending cryptocurrencies.
A few days ago, the SEC also opened an investigation into Uniswap Labs, which is developing the world’s largest DeFi exchange, and accused it of violating securities exchange regulations.
Even the FED itself and its chief, Jerome Powell, spoke openly in July about the need to have an “appropriate regulatory framework, which frankly we don’t have”.
Coinbase expands its operations and reports record quarterly results
This news comes just days after Coinbase’s CEO announced that the company will buy $500 million in cryptocurrencies and place 10% of its quarterly profits in a cryptocurrency portfolio.
The company plans to invest in “Ethereum, Proof of Stake assets, DeFi tokens, and many other crypto assets supported for trading on our platform”, becoming the first public company to do so, chief financial officer Alesia Haas said in a company blog post on 19 August.
Coinbase on the stock exchange
The company was listed on the Nasdaq technology exchange in New York on 14 April at $381 for a total value of more than $70 billion.
Yesterday, the stock lost about 8%, closing at $258.20. It generated revenue of $2.23 billion in the second quarter of 2021, with earnings per share of $3.45.
The platform reported a 44% growth in users making monthly transactions, bringing their number to 8.8 million, while total active profiles would be around 67 million.