Coinbase claims SEC plans action over Coinbase Lend program

Coinbase claims that the United States Securities and Exchange Commission (SEC) has plans to sue it over its Lend program. In an article published on Coinbase’s blog, Coinbase’s chief legal officer Paul Grewal states that “the SEC has told us it wants to sue us over Lend. We don’t know why”.

Last Wednesday, the SEC has given Coinbase what’s called a Wells notice about the 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.

Coinbase says that it has been proactively engaging with the SEC about Lend for nearly six months. Specifically for Lend, Coinbase is seeking to allow eligible customers to earn interest on select assets on Coinbase, starting with 4% APY on USD Coin (USDC).

Coinbase says that the SEC considers Lend to involve a security, but wouldn’t say why or how it had reached that conclusion.

“Rather than get discouraged, we chose to continue taking things slowly. In June, we announced our Lend program publicly and opened a waitlist but did not set a public launch date. But once again, we got no explanation from the SEC. Instead, they opened a formal investigation. They asked for documents and written responses, and we willingly provided them”.

Coinbase says that the SEC has informed it that if Coinbase launches Lend, the SEC intends to sue.

“The net result of all this is that we will not be launching Lend until at least October. Coinbase continues to welcome additional regulatory clarity; mystery and ambiguity only serve to unnecessarily stifle new products that customers want and that Coinbase and others can safely deliver,” Coinbase concludes.

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