Zhu Su, co-founder of now-defunct crypto hedge fund Three Arrows Capital, believes the US Securities and Exchange Commission (SEC) saved Coinbase from big trouble.
According to Zhu Su, the SEC’s refusal to allow cryptocurrency exchange giant Coinbase to launch its lending product has kept the exchange from engaging in the ongoing market transition.
Tweet On December 28, Zhu Su said that the SEC has stalled the launch of the Coinbase Lend initiative until 2021 to protect the exchange platform from a possible crisis.
Coinbase “Saved” From Crypto Lending Crisis
In June 2021, Coinbase announced plans to launch a program called Lend, which will enable users in the United States, except New York and Hawaii, to earn a 4% annual percentage yield (APY) when they lend their USDC. .
However, in September 2021, Coinbase revealed that the company received a Wells notice from the SEC, indicating that the securities regulator was looking to sue Coinbase if the crypto exchange went ahead with launching the lending program.
The legal threat from the SEC came as a surprise to Coinbase, which said it had been in talks with the regulator for about six months.
According to a blog post by Paul Grewal, the firm’s chief legal officer, the SEC gave no concrete reason for its action and said the product launch would be put on hold until October. Coinbase then abandoned its planned lending program and closed the waiting list.
Crypto Lenders Are Struggling To Keep Afloat
Meanwhile, CeFi lending firms have been front and center in the current crypto collapse. One such company is Celsius, which used to be a crypto lending giant before its collapse. In June 2022, the crypto lender Stopped withdrawals and swaps, and transfers, citing “excessive market conditions” as the reason for its action.
wold too stopped Withdrawals, deposits and trading activities in its platform plummeted in July, stating that the firm was facing financial difficulties amid the crypto recession. The crypto lender also said that there had been large customer withdrawals of around $200 million since June 12, triggered by the collapse of Terra, the Celsius crisis and the Three Arrows Capital (3AC) loan default.
Furthermore, crypto brokerage firm Genesis Global Trading suspended withdrawals for its lending organization Genesis Global Capital in November, which was affected by the FTX decline and is currently on the verge of bankruptcy,
Meanwhile, the suspension has impacted Gemini’s Earn program as Genesis is one of the main borrowers on the Earn platform. Due to the actions of Genesis, Gemini late Requests from customers to redeem Earn products.
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