- Following the investigation filed against DEX, Uniswap by the SEC, Coinbase declared itself ready should the US authorities decide to investigate them.
- The company has already received a notice from Wells, which is the official way a regulator tells a company that it intends to sue the company in court over its Coinbase Lend program.
- Coinbase Lend is the company’s latest bet focused on cryptocurrency-based loans and debt products.
While the crypto sector grows daily and is increasingly demanded by large players, this situation does not leave everyone happy. The lack of regulations that some enjoy so much makes others uncomfortable, and Coinbase, the world’s second-largest exchange, has this very clear.
A few days ago it was announced that the United States Securities and Exchange Commission (SEC), a government agency that “protects investors and maintains the integrity of the securities markets,” began an investigation against Uniswap, the decentralized exchange. most recognized in the world.
This raised the alerts of Coinbase who are prepared to also investigate them.
Coinbase prepared for an investigation
Paul Grewal, the company’s legal director, announced that although they do not want it, they know that the SEC will set its eyes on them and that they will most likely be sued. From the exchange they trust that they did not do anything considered illegal, so they are not afraid of what may happen.
“After months of effort on Coinbase’s part to participate productively, the SEC gave us what is called a Wells Notice regarding our planned Coinbase Lend program. ORA Wells notice is the official way a regulator tells a company that it intends to sue the company in court.“Grewal said through the blog owned by the exchange.
What is Coinbase Lend?
This proposal is the latest bet of the company, which wants to join a market that is expanding such as loans and debt products based on cryptocurrencies. Other exchanges have already applied it and with very good returns. They provide security to both parties: both to those who lend as well as to those who receive.
The program, which continues beyond this “threat”, plans to offer clients a 4% interest rate on USDC stablecoin deposits., stablecoin that was created by the Circle company in collaboration with Coinbase. Its launch is full of doubts and the deadlines are unknown. The scheme to be used is similar to that used in the traditional economy, with an extremely attractive interest rate.
Coinbase notified the SEC
Oddly enough, the SEC learned of Coinbase’s plans from Coinbase’s own directors.Yes, they were the ones who reported on their plans and sought some kind of guidance, as published by Coinbase CEO and co-founder Brian Armstrong.
“We could have simply launched the product, but decided not to. This is far from the norm in our industry. Other cryptocurrency companies have had credit products on the market for years, and new credit products continue to launch as recently as last month. But Coinbase believes in the value of open and substantive dialogue with our regulators. So first we take Lend to the SEC “Grewal said.
And I add:
“They just told us that they are evaluating our Lend product through the prism of decades-old Supreme Court cases called Howey and Reves. The SEC will not share the assessment itself, just the fact that they have. “
Joe Biden’s administration is analyzing and focusing on DeFi (decentralized finance) projects. More news is expected in the coming months. There are steps on one side and steps on the other, it remains to know who will walk faster.
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