On Wednesday, billionaire Mark Cuban instructed Coinbase CEO Brian Armstrong to fight back against the SEC and go on the offensive. Cuban responded to a Twitter thread started by Armstrong, who accused the SEC of threatening to sue Coinbase.
After the SEC threatened to prosecute Coinbase, Coinbase CEO Brian Armstrong should on the offense against the agency, according to Mark Cuban.
1/ Some really sketchy behavior coming out of the SEC recently.
— Brian Armstrong (@brian_armstrong) September 8, 2021
Mark Cuban’s Advice for Coinbase
In response to a series of tweets by Armstrong lambasting the SEC, Cuban delivered a response that addressed the issue of Lend, an interest-bearing product from Coinbase.
The SEC has reportedly determined that Coinbase’s forthcoming Lend product satisfies the agency’s definition of a security. And it has shown that it will step in and regulate appropriately — which will, in turn, make it more aggressive in its oversight of the rest of the crypto financial sector.
Cryptocurrency exchanges provide a way for individuals to purchase and trade cryptocurrency. Coinbase is one of the world’s largest cryptocurrency exchanges, and they just had their IPO. The program, Lend, was going to debut, enabling users to borrow a digital currency, USDC, which is linked to the value of the US dollar (one USDC is always supposed to equal and be traded for the value of one US dollar).
Users in return may earn 4% interest on the loan, which is more than the existing banks are giving for savings accounts. That said, if the Coinbase Lend service had been available to the general public, it could have been a real draw for those who were otherwise averse to crypto investments.
Brian, this is "Regulation via Litigation". They aren't capable of working through this themselves and are afraid of making mistakes in doing so. They they leave it to the lawyers. Just the people you don't want impacting the new technologies. You have to go on the offensive
— Mark Cuban (@mcuban) September 8, 2021
In the crypto community, many were in agreement with Cuban. Lobbying powerhouse Jerry Brito said on Twitter that Coinbase should let the SEC take the business to court in order to get legal clarification.
1/ If true, this is pretty underhanded. I know it's easy for me to say, but Coinbase should go ahead and launch its product, let the SEC sue, and go to court. Let the SEC make its case and let a judge decide what the law is. https://t.co/iRQRvANGTW
— Jerry Brito (@jerrybrito) September 8, 2021
For months, the SEC has been warning that more crypto regulation is on the way, according to Chairman Gary Gensler. The Financial Times interviewed Gensler in August, and in the discussion, he noted that the multi-trillion dollar scale of the crypto sector warranted a regulatory framework like any other.
Crypto in the SEC’s Crosshairs
Gensler has made it very clear that new rules are forthcoming. The market, he said in July, is a financial system in the Wild West, noting that ambiguity rules the industry.
The SEC will also allocate additional resources to increasing the legal liability of firms that offer goods or services that may constitute securities, including those accessible on DeFi platforms. In the focus is a 4% annual interest rate provided by the Coinbase Lend service, which enables anyone to loan out their USDC coins.
One of the most popular options for traders to transfer from digital currency to fiat money, USDC is simple to use, and transactions are processed fast. The SEC’s attention on stablecoins means that the USDT token is also subject to their interest.