The CEO of Coinbase, Brian Armstrong, has taken to Twitter to express his displeasure as to how the U.S Securities and Exchange Commission (SEC) threatened to sue the company over crypto yield program which the SEC considers a security
Armstrong tweeted today that there has been some “really sketchy behavior coming out of the SEC recently,” before starting a thread on Twitter, detailing the company’s engagement with the SEC.
In the thread, Armstrong explained that cryptocurrency companies have been offering crypto yield programs for many years and his company decided to offer their own version of it. Coinbase’s crypto yield program was expected to go live in the coming weeks, in which it intends to offer 4% annual yield returns on deposits of the USDC stablecoin. He said because they try to be as regulatory compliant as possible, they decided to give the SEC a “friendly heads up and briefing.”
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. He stated, “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.”
The SEC’s actions, if Armstrong has reported them accurately, appear to be bad news for competitors like BlockFi and Celsius who already offer crypto yield products. BlockFi is facing investigations in a number of states over its high-interest products.
Armstrong reiterated his willingness and that of Coinbase to follow the law and encouraged the SEC to provide clarity on the subject matter and enforce them evenly across the industry.
He stated, “Look…. we’re committed to following the law. Sometimes the law is unclear. So if the SEC wants to publish guidance, we are also happy to follow that (it’s nice if you actually enforce it evenly across the industry equally btw).”
SEC boss, Gary Gensler has regularly urged crypto firms to work with the SEC so that they can operate under public frameworks and ensure their survival but according to Brian, the SEC seem unwilling to talk to crypto companies, citing an experience he had with the financial watchdog in May 2021.
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He stated, “I travelled to DC to meet with every regulator and branch of government I could. The SEC was the only regulator that refused to meet with me, saying ‘we are not meeting with any crypto companies.’ This was right after we became the first crypto company to go public in the U.S.”
Coinbase’s COIN is trading 266.81, down 2.28% in pre-market. Since its listing, the stock is down over 18%.