SEC's decision to declare Coinbase's Lend program unregistered security offering unintentionally saved Coinbase from the same fate as BlockFi, Celsius, Genesis - crypto shadow
The crypto industry’s biggest secret - the Shadow Banking System, where cryptocurrencies worth billions of dollars are borrowed & lent on an un-collateralized basis, between some of the industry’s biggest names, was exposed in recent months as the biggest driver of the spectacular bull market...
In the midst of the 2021 bull market, the crypto industry’s second biggest player had its own plans to launch a lending program, namely Coinbase Lend. While the semantics of Coinbase’s wording is of less importance for this story, the playbook was meant to be similar to that of the largest crypto shadow banks; borrow cryptos worth billions of dollars from clients already onboarded with Coinbase and lend out in the Shadow Debt Market to worlds largest proprietary trading firms, hedge funds, and market makers.