- Coinbase Borrow will be shut down permanently as of May 10.
- Clients existing loan balances would not be affected.
The cryptocurrency exchange Coinbase has recently announced that it would no longer be granting new loans via its borrowing service Coinbase Borrow. According to a statement released by Coinbase on May 3, the service will be shut down permanently as of May 10.
The crypto exchange, however, assured its clients that their existing loan balances would not be affected. This news comes as Coinbase continues to cause friction with the SEC in the United States. Both the securities authorities and the cryptocurrency trading platform have filed lawsuits.
The popular lending service Coinbase Borrow allowed borrowers to borrow up to $1M using Bitcoin as security. Unfortunately, this service was restricted to only a few US states.
Ongoing SEC Tussle
At an annual interest rate of 8.7%. Coinbase Borrow allowed customers to borrow nearly 40% of the value of the Bitcoin collateral. Brian Armstrong, CEO of Coinbase, has described the Borrow program as a way to help the cryptocurrency industry grow.
Coinbase has been accused by the SEC of breaking federal securities rules by selling unregistered tokens. While the exchange itself has accused the SEC of not being forthcoming enough on cryptocurrency legislation. The cryptocurrency exchange is also in the middle of a legal dispute with the US Securities and Exchange Commission over its staking services.
Some Coinbase investors, in addition to the SEC, have sued the cryptocurrency exchange for allegedly profiting from insider information during the stock listing process. The complaint says that by taking these measures, Coinbase was able to prevent losses of over $1 billion.
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