Coinbase Suspends Offering Loans Against Bitcoin Via Its Borrow Service

Coinbase (NASDAQ: COIN) has announced the suspension of new loans offered through its borrowing service, Coinbase Borrow. According to a statement released on May 3, the service will be discontinued from May 10. Existing customers with outstanding loans will not be affected by the suspension.

This decision follows ongoing legal disputes between Coinbase and the US Securities and Exchange Commission (SEC). The suspension of new loans through Coinbase Borrow has been seen as a move to avoid further regulatory issues as the exchange seeks to resolve its disputes with the SEC.

Coinbase, the popular crypto exchange, has decided to suspend the issuance of any new loans through its borrowing service, Coinbase Borrow. The exchange announced on Wednesday, May 3, that the service will no longer be available starting from May 10. However, existing customers with outstanding loans will not be affected.

Coinbase has been in a legal battle with the U.S. Securities and Exchange Commission (SEC), which has accused the exchange of violating federal securities laws by selling unregistered tokens. Coinbase, on the other hand, has blamed the SEC for not providing sufficient clarity on crypto regulations. In response to the suspension of Coinbase Borrow, a spokesperson for the exchange told Bloomberg that they regularly evaluate their products to ensure they prioritize the offerings that customers care about the most.

Coinbase Borrow was a popular service that allowed customers in certain U.S. states to obtain loans of up to $1 million by using Bitcoin as collateral.

Coinbase CEO Brian Armstrong had referred to Coinbase Borrow as a program designed to expand the cryptocurrency economy. Through this program, customers could obtain loans amounting to almost 40% of their Bitcoin collateral, subject to an annual interest rate of 8.7%.

Coinbase, the SEC, and Legal Battles

Recently, Coinbase has become involved in multiple legal battles, including with the US SEC, which accuses the exchange of offering staking services illegally. Furthermore, some Coinbase investors have filed lawsuits against the company, alleging that they used insider information to profit during the stock listing process, avoiding losses of over $1 billion. Another lawsuit accuses Coinbase of violating customers' privacy by using their biometric data without consent.

Coinbase is currently facing various legal challenges from multiple sources, and these allegations are raising concerns about the company's compliance practices and potential reputational damage.

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