Coinbase Inc. the first crypto exchange in the US to go public in April this year could face a potential lawsuit from the US Securities and Exchange Commission (SEC) for their unreleased lending product. The exchange in an official blog post revealed that the SEC intends to pursue legal action against them as they deem it as security. The exchange further claimed that it has tried establishing a dialogue with the regulatory body for over 6-months but to no avail.
After months of trying to engage with the @SECGov on our planned Coinbase Lend product, we recently received notice that it intends to pursue legal action against us. We believe dialogue is at the heart of good regulation, even if the SEC may not. https://t.co/OumvyTPQdj
— Coinbase (@coinbase) September 8, 2021
The CEO of the firm Brian Armstrong took to Twitter to reveal that the exchange has received a Wells Notice from the SEC and even called out the regulatory body for their unclarity on the issue. He said,
“They responded by telling us this lend feature is security. Ok – seems strange, how can lending be security? So we ask the SEC to help us understand and share their view. We always make an effort to work proactively with regulators and keep an open mind.”
6/ They refuse to tell us why they think it's a security, and instead subpoena a bunch of records from us (we comply), demand testimony from our employees (we comply), and then tell us they will be suing us if we proceed to launch, with zero explanation as to why.
— Brian Armstrong (@brian_armstrong) September 8, 2021
Ripple Community Reminds Coinbase of XRP Security Lawsuit
The Coinbase SEC saga could become the next chapter in SEC’s security lawsuits after Ripple. The calls for relisting XRP on Coinbase increased as the Ripple community reminded how XRP was left alone in the battle. Many even called out Coinbase for toeing the line during XRP delisting and realizing SEC’s fault now that they themselves could get entangled in a potential lawsuit.
— CryptoBull (@CryptoBull2020) September 8, 2021
One user wrote that it’s not the time for infighting and called upon everyone to stay united in the fight against the SEC. Ripple is currently fighting it out against the SEC in the court with several twists and turns in the case. The main attraction at this point is William Hinman, former SEC executive comments on ETH being a non-security during his tenure. A part of the deposition revealed that Hinman had informed Ripple about XRP being a security, but Ripple’s legal counsel argued that the deposition was mischaracterized and important parts of it were sealed.
I'm not silent about my disdain for @Coinbase. I would love nothing more than to say "we told you so". However, this isn't the time. It's time for #Crypto companies to start UNITING publicly! This is an attack on YOUR emerging industry and it began w/ @Ripple! It's time for (1/2) https://t.co/LfQLpSGDt7
— Mrs. RipplemanXRP Ⓥ (@MrsRipplemanXRP) September 8, 2021
Many in the XRP community accuse Hinman and SEC of colluding with Ethereum and helping the altcoin to grow its market and earn profits based on their holdings, despite knowing Ethereum conducted an ICO.
The SEC under the Biden administration seems admant on targeting Proof-of-stake, first the flawed amendments to crypto taxation was passed in the infrastructure bill, later SEC also initiated an investigation around Uniswap Labs, the creators of the largest DEX platform. Gary Gensler, the SEC chief has also revealed the agency’s plans to go after the Defi market.
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