Coinbase says SEC investigating its crypto lending product

The chief executive of Coinbase claimed in a series of tweets Tuesday that the Securities and Exchange Commission (SEC) is investigating his company over an upcoming cryptocurrency lending program.

Brian Armstrong alleged that the agency has threatened to sue Coinbase if the feature is launched.

“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,” Armstrong wrote.

“But in this case they are refusing to offer any opinion in writing to the industry on what should be allowed and why, and instead are engaging in intimidation tactics behind closed doors,” he added. “Whatever their theory is here, it feels like a reach/land grab vs other regulators.”

The planned platform would allow users with a stablecoin — a crypto asset ostensibly pegged to national currencies — called USD Coin to make money by lending it to other users and recouping interest.

Coinbase, the largest cryptocurrency exchange in the U.S., wrote in a blog post Wednesday that SEC regulators gave the company notice last week that they plan to take civil enforcement action over the platform.

The company now plans to delay the launch of the program until at least October.

The Hill has reached out to the SEC for comment.

The alleged enforcement action comes amid new scrutiny of volatile cryptocurrency markets from Washington.

SEC Chairman Gary Gensler has testified that there’s minimal protection against fraud or manipulation in the markets because they have not been assigned a regulator with sufficient authority.