Just five months after its choppy debut on the Nasdaq, Coinbase could find itself in court.
The crypto exchange said Wednesday the Securities and Exchange Commission has threatened to sue if it proceeds with plans to launch a lending program.
The regulator issued a so-called “Wells” notice, which tells a company it intends to sue in court.
The program in question – ‘Lend’ – allows users to earn interest by lending crypto assets.
Coinbase’s chief legal officer said in a blog post that the SEC believes that that program involves a security.
He said Lend does not qualify as a security because it’s not an investment contract or a note.
But he said Coinbase will delay the launch of its ‘Lend’ product until at least October as a result of the warning.
The U.S. has begun raising concerns over programs that allow crypto owners to lend in return for interest.
In July, New Jersey ordered crypto platform BlockFi to stop offering interest-bearing accounts.
The SEC did not respond to a request for comment. Coinbase shares fell in early trading Wednesday.