Coinbase Borrow Service Will Cease to Exist From May 10

In the latest development, crypto exchange Coinbase (NASDAQ: COIN) has decided to suspend issuing any further new loans previously offered through its borrowing service Coinbase Borrow. In a statement on Wednesday, May 3, Coinbase stated that the service will cease to exist starting from May 10.

However, the crypto exchange stated that there would be no impact on the customers’ outstanding loans. The development comes at a time when Coinbase has been ruffling feathers with the U.S. Securities and Exchange Commission (SEC). The securities regulators and the crypto exchange have taken matters to court.

While the SEC blames Coinbase for violating federal securities laws by selling unregistered tokens, the crypto exchange has blamed the regulator for not providing enough clarity on crypto regulations. Speaking on the recent development, a Coinbase spokesperson told Bloomberg:

“We regularly evaluate our products to ensure we’re prioritizing the offerings that our customers care about most”.

Coinbase Borrow was a popular service that offered loans of up to $1 million against Bitcoin as collateral. However, this facility was available only in certain US states.

Using Coinbase Borrow, customers could borrow nearly 40% of the value of the Bitcoin collateral, at an annual interest of 8.7%. Coinbase CEO Brian Armstrong called the Borrow program a facility to expand the crypto economy.

Coinbase, the SEC, and Legal Battles

As said, crypto exchange Coinbase has been entangled in a legal battle with the US SEC recently claiming no wrongdoing in offering staking services on its platform.

Apart from the SEC, some investors at Coinbase have also dragged the crypto exchange to court over charges of using insider information and profiting during the stock listing process. The lawsuit claims that with these methods, Coinbase managed to avoid over $1 billion in losses.

Also, another lawsuit claims that Coinbase used customers’ biometrics including facial information and fingerprints without their consent and thus violating their privacy. It seems that Coinbase is facing legal blows from several ends at this point.

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.