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The Securities & Exchange Commission has threatened the online exchange platform Coinbase (COIN) +1.49% with a lawsuit, after the company introduced plans to offer a new interest-bearing product called Lend.

The company gave the Commission a heads-up about their product, which will enable users to earn interest on their crypto holdings and worked together with the SEC for six months to ensure everything the product offered was compliant with the law.

The SEC has been coming after crypto-products since chairman Gary Gensler took over at the Commission. Firms offering these product or looking to break into the market have been becoming more and more frustrated with the US regulator over the matter.

Coinbase CEO Brian Armstrong took to Twitter (TWTR) -0.29% on Wednesday to air his annoyance at the SEC and was met with a wave of support from other leaders in the crypto space.

Armstrong coined the regulators behaviour as “sketchy” saying he didn’t see the protective element of disallowing it. The thread begins:

Mark Cuban chimed in on the Twitter thread, recommending Armstrong goes into the offensive against the SEC. “Brian, this is ‘regulation via litigation.’ They aren’t capable of working through this themselves and are afraid of making mistakes doing so,” (Business Insider, 2021). 

“You have to go on the offensive.” The entrepreneur continued. Others agreed with Cuban’s advice, lobbyist Jerry Brito saying that Coinbase should let the SEC sue the company and gain legal clarity through the courts.

“I would view this as a short-term conflict between the crypto business and regulators,” said James Wo, CEO of digital asset manager DFG. He believes the crypto exchange should turn the spiel around and take the SEC to court.

“Without these conflicts, it’s hard for regulators to give clear instructions,” (Business Insider, 2021) he continues. Wo thinks the issues will all be resolved once the SEC can give a better definition of what is allowed.

As Coinbase is not the only company currently in dealing with these issues, the SEC is under more and more pressure to deliver a regulation frame that is workable.


*Stock percentages taken on 09.09.2021 at 11:20.

*Wu, Ethan (08. September 2021). Business Insider: Mark Cuban says the SEC is trying to regulate Coinbase through litigation and urges CEO Brian Armstrong to ‘go on the offensive’. Last viewed on 09.09.2021 on

*Nagarajan, Shalini (08. September 2021). Business Insider: The SEC threatens to sue Coinbase over its crypto lending product - and CEO Brian Armstrong responds by calling the regulator’s actions ‘sketchy’. Last viewed on 09.09.2021 on