Coinbase says SEC threatened lawsuit over Lend feature

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Coinbase says SEC threatened lawsuit over Lend feature

Cryptocurrency exchange Coinbase seems to have some issues with the Securities and Exchange Commission (SEC) over a planned feature that lets people lend cryptocurrency through its platform. In a Medium post on Tuesday, Coinbase’s chief legal officer wrote that the regulatory agency threatened to sue the company if it launched the feature. Coinbase’s CEO posted a Twitter thread on Tuesday evening saying that the SEC wasn’t clear about what it wanted.

According to Coinbase’s CEO, Brian Armstrong, the company told the SEC about its new Lend feature as a courtesy but didn’t anticipate pushback, based on his impression that similar features exist on other platforms. However, according to Armstrong, the SEC informed the company that the lend feature would be considered a security, meaning it would be regulated as an investment. Coinbase disputes that classification, but they weren’t able to make their case in the same informal channels. Instead, according to Armstrong and the company, the SEC opened an investigation into Coinbase, asking for employee testimony and the names and contact information of people who had signed up for the Lend waitlist.

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5/ They responded by telling us this lend feature is a security. Ok – seems strange, how can lending be a 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.

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