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Coinbase has abandoned its plans to launch a new digital lender, following pressure US security officials who had warned that it was an unregistered security that would cause them to take legal action.
The largest U.S. cryptocurrency exchange said in a statement last Friday that it had made a “difficult decision” to retain its lending plans “as we continue our work to gain an understanding of all crypto companies”.
It’s a shameful ride for Coinbase, whose boss was Brian Armstrong public beatings to the Securities and Exchange Commission earlier this month, claiming his trade was not secure. He also criticized the directors for lack of transparency and “unnecessary” actions in pursuing the company.
Coinbase first announced Loans in June. Initially it would provide 4% per annum for the owners of solidcoin, USD Coin. It opened the waiting list, which is said to have attracted “hundreds of thousands” of subscribers.
But the SEC warned that it would file a lawsuit if the product was approved, and offer suppoenas to Coinbase who want more.
The SEC’s move highlighted the legal controversy at heart on its approach to regulating cryptocurrency platforms, related to security.
Under what is known as the Howey trial, the Supreme Court of the United States has ruled that a sales agreement exists “when a person sells his money to a similar business and expects to benefit from the efforts of an advertiser or another person”.
Crypto platforms that focus on electronic products have become popular recently due to the high yield they offer. Coinbase conversion will be a challenge for some of the more advanced platforms – Armstrong he was like a hero – as well as government officials go around the place.
New Jersey Attorney General’s Office on Friday ordered digital Celsius lending to stop releasing his curiosity, while Texas government officials want to hear from them to do the same. Organizations in five countries – Alabama, Kentucky, New Jersey, Texas and Vermont – are doing the same against BlockFi, another cryptocurrency lending platform.
Gary Gensler, chairman of the SEC, in a statement to the Senate banking committee last week said he believed the “big” money was secured, indicating that violations of the law could continue.
He was criticized by Pat Toomey, a Pennsylvania Republican senator, who criticized Gensler for “Regat”[ing] compulsory ”instead of giving public guidance on what money should be for security. The SEC chairman said there was “a clear signal”.
Gensler has shown great concern for consumer safety in “Wild West”The cryptocurrency markets, which he said are” full of fraud, deception and harassment “are more common. He also urged Congress to give regulators the power to monitor crypto exchanges and call for platforms to register with the SEC.
The SEC did not immediately respond to a request for comment on Coinbase’s decision to cancel the loan.
Coinbase said: “We are constantly looking for ways to bring our customers new, reliable products.”