Coinbase terminates its “Borrow” service
American crypto exchange Coinbase decided to shut down its Coinbase Borrow services.
Coinbase is a US-based Nasdaq-listed public crypto exchange. This crypto exchange always tries to remain in compliance with the country’s financial rules & regulations. Since June of this year, this exchange has been under huge legal hurdles because of a suit, initiated by the United States Securities Exchange Commission (SEC) over violation of securities laws.
On 20 July 2023, the Coinbase exchange ordered all the customers to repay their existing loans before 20 Nov 2023 and also confirmed that no one customer can borrow loans from the Coinbase Borrow service.
“Customers are unable to take out new lines of credit against their crypto and existing Coinbase Borrow customers will have until November 20, 2023, to pay back their existing loans,” the announcement read.
Coinbase Borrow service was not a popular service under Coinbase’s empire. Through this service, customers were able to get up to a $1 million loan on behalf of the 40% Bitcoin holdings.
Nasdaq-listed exchange confirmed that the decision had been taken because people were not using this service. Exchange also confirmed that they will liquidate the borrower’s Bitcoin collateral if they will not repay their loan within the allotted time frame.
Exchange failed to provide any figure to clarify the affected numbers of customers but the announcement surely created a bad situation for some of the Coinbase Borrow service users.
If in any situation any customer will fail to repay the loan then Coinbase will also charge a 2% fee against the liquidated fund amount.
Some Reddit users alleged that Coinbase wants to make Bitcoin with such a high amount of liquidation fee.
A few crypto Twitter users claimed that Coinbase decided to terminate its Borrow service citing the company’s legal conflict with the US SEC agency.