Public Crypto Exchange Bitches on Twitter

Complaining via Twitter, a cryptocurrency exchange that plans to pay “interest” to customers who put up their Bitcoins so the exchange can lend them, has found itself in the crosshairs of the Securities and Exchange Commission.

After giving the securities regulator a “friendly heads up” (if others are doing it, why would they reach out unless they had doubts?), the publicly traded company said that the SEC notified them that “this lending feature is a security.”

Then, the hammer supposedly fell.

“They refuse to tell us why they think it’s a security, and instead subpoena a bunch of records from us (we comply), demand testimony from our employees (we comply), and then tell us they will be suing us if we proceed to launch, with zero explanation as to why.”

Rule number one of dealing with regulators is that if you are going to ask (or tell) about your plans, you should anticipate the response and be prepared to explain your position.

Nothing on the Twitter feed indicates that the company was prepared to argue why, when it raises capital (ie, borrows Bitcoin) to engage in a business transaction and will share its profits with its investors that is not a “security” under the Howey test.

Especially when the new Chairman of the SEC has spoken out about the unregulated cryptocurrency landscape.

Watch this space.

Source: https://jeffkoeppel.wordpress.com/2021/09/13/public-crypto-exchange-bitches-on-twitter/