Coinbase & Regulation: Are They Closing Your Account?
Coinbase has been in the news quite a bit lately. Apparently, some users have been asked to permanently close their accounts and withdraw their assets from Coinbase before September 25th. There are also reports that banks like Bank of America are closing customer accounts that transact with Coinbase. Meanwhile, the Indian government has put pressure on Coinbase, and they’ve decided to discontinue all exchange services and close their customer accounts by September 25th. We wanted to share the facts and our thoughts on what’s going on with Coinbase to help out our users who rely on Coinbase. So, if you’re one of them, make sure to read on and take the necessary action if you’re affected by these changes.
Crypto vs. SEC: Coinbase Leads the Charge
As the second largest cryptocurrency exchange in the world, Coinbase has found itself embroiled in a series of regulatory challenges with the US SEC. Their latest battle in June 2023, where the SEC charged Coinbase for operating as an unregistered securities exchange, broker, and clearing agency, is a long continuation of the SEC’s crusade against crypto. However, Coinbase has been in the crosshairs of the SEC well before its recent high-profile court cases. Ever since 2021, when Coinbase launched its “Lend” initiative that allowed users to earn interest on their cryptocurrency holdings, the SEC considered the product a security offering, demanding it to be registered under the appropriate legal frameworks. Coinbase evidently did not concede, as its retail lending and borrowing operations continued throughout the years.
Furthermore, Coinbase has stood at the forefront of crypto advocacy, committing significant resources to lobbying and grassroots activist efforts in influencing crypto regulation within the United States. In the 2022 election cycle, Coinbase spent $3.39m on lobbying efforts. Last month, Coinbase established a non-profit organization called Stand With Crypto, which promotes pro-crypto policies. Stand With Crypto has attempted to unify and mobilize crypto advocates, and has already hosted events in Ohio, Nevada, Georgia, and Montana.
Big Brother Retaliates?
What follows in this article is pure speculation but may align with the current ongoing events related to Coinbase. Within the past month, the SEC has intensified their efforts at regulating Coinbase’s activities, including requesting them to furnish an entire list of users that had signed up to Coinbase’s Lend initiative. On September 19th, SEC’s Crypto Enforcement Chief David Hirsh reaffirmed their hardline stance towards Crypto, warning the industry that while their litigation load is heavy, they are not stopping at Coinbase and Binance.
For the past month and a half, increasing messages have surfaced regarding Coinbase customers having their accounts forcibly closed, with no reason given. For some, Coinbase states that they have violated terms and conditions, whereas for others, a simple notification of account closure is given. More interestingly, reports have also surfaced on X that some users who traded on Coinbase and banked with Bank of America had their checking accounts closed without reason. While little information has been released regarding this phenomenon, the SEC may have been applying pressure to banking institutions regarding customer accounts with links to Crypto.
What’s Next? A Battle Of Attrition
Over the past months, The SEC’s litigations against crypto/DeFi companies can best be described as a strong-arm tactic. Small and medium-sized companies do not have the resources to withstand an SEC lawsuit or settle. In addition, when these smaller companies receive the lawsuit, the investors of these smaller projects would bail and cripple the company.
However, the SEC is spread thin, and has more than 70 ongoing crypto-related litigations; its enforcement budget is finite, and lacking when faced against industry giants such as Coinbase and Binance. In fact, the SEC has already been faced with a series of losses against Uniswap and Ripple. It is possible that recent wins for crypto against the SEC have given confidence to more crypto companies to fight in court rather than settle with the SEC, further straining the agencies’ resources. The coming months will prove to be both an exciting and pivotal moment for crypto regulation.
Who We Are
Diamond Protocol is a leveraged liquidity provision platform that operates on top of DEXs. It allows liquidity providers on platforms like Uniswap/PancakeSwap to hedge their LP positions by borrowing and shorting volatile assets.
Our philosophy has always been to give the DeFi and crypto community a product that allows systemic earnings in a volatile market. From the beginning of our product design, we grappled with the question of how to earn profit in a market that is so unpredictable. This product aims to significantly increase our user’s odds of winning. We aim to create a scenario where a trader can accrue fees earned and wait for an ideal exit price even if they guess the market wrong.
Our approach has since been appreciated by seasoned traders within the crypto and DeFi ecosystem, and we welcome everyone to join our discord, where we regularly host trading competitions and events with rewards. Come on by and meet the team and other veteran traders eager to discuss and share strategies!
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