Coinbase says SEC threatens lawsuit over lending products

Brian Armstrong claimed via Twitter that despite months of conversations, the SEC said it could sue Coinbase if it launched a lending product. The SEC has issued a "Wells Notice," an informal warning before the agency takes civil action.
United States-based cryptocurrency exchange Coinbase said the U.S. Securities and Exchange Commission (SEC) has threatened to sue over its yet-to-be-launched lending project, “Lend.”
Coinbase said it had been in discussions with the SEC about its plans for nearly six months. Despite those ongoing communications, Coinbase said in a blog post on Tuesday that the SEC had issued a “Wells Notice,” an informal warning before the agency pursues a civil lawsuit.
Lend aims to provide eligible customers with a 4% annualized percentage yield by lending USDC to “verified borrowers.”
Coinbase said the SEC declined to explain its concerns about the Lend project.
“Instead, they are now telling us that they intend to sue if we launch Lend,” according to the exchange’s post.
In a tweet on Tuesday, Coinbase CEO Brian Armstrong said his company has complied with all SEC requests, including providing subpoenaed records and employee testimony.
Armstrong also said the agency did not give a reason for its lawsuit. He called it “odd” that the SEC classified Lend as a security.
“How can loans be classified as securities?” Armstrong tweeted.
Coinbase declined to comment further. A spokesperson for the U.S. SEC did not immediately respond to a request for comment. (CoinDesk)