“They refuse to tell us why they think it’s a security, and instead subpoena a bunch of records from us,” said Brian Armstrong after he revealed that the SEC threatened to sue Coinbase.
The United States Securities and Exchange Commission has reportedly threatened to sue Coinbase over a crypto yield program it deems as a security.
Coinbase CEO Brian Armstrong tweeted on Wednesday that there has been some “really sketchy behavior coming out of the SEC recently” before launching into a 21 post thread detailing the SEC’s dealings with the firm.
Armstrong explained that the crypto exchange approached the SEC earlier this year to brief the enforcement body over the up-and-coming Coinbase Lend program that intends to offer 4% annual yield returns on deposits of the USD Coin (USDC) stablecoin.
According to the Coinbase CEO, the SEC responded by telling the firm that the lending program is a security without any explanation and threatened to sue if the service was launched.
Armstrong pointed out that there are other crypto firms on the market that currently provide similar lending services to their customers and called for the SEC to provide regulatory clarity on the topic. The SEC’s actions, if Armstrong has reported them accurately, appear to be bad news for competitors BlockFi and Celsius, which already offer crypto yield products. BlockFi is facing investigations in a number of states over its high-interest products.