Coinbase takes its SEC battle to the public

September 8, 2021, 3:38 PM UTC

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Few CEOs take their regulatory battles public to the Twitter-sphere, but Coinbase CEO Brian Armstrong has not exactly been a typical public company chief executive.

Early Tuesday, the chief executive of the country’s cryptocurrency exchange blew open the doors on its back-and-forth with the Securities and Exchange Commission over a new crypto lending product it hopes to offer called “Lend.” 

“Some really sketchy behavior coming out of the SEC recently. Story time…” Armstrong wrote in a Twitter thread accompanying a company blog penned by Chief Legal Officer Paul Grewal on the issue. 

In the blog post, the company says the regulatory agency has threatened to sue should Coinbase launch the product, and the SEC considers the product to be a security. But Coinbase says that while the company has been proactive in its communications, yet the agency has not been clear on why it has made that decision. 

“In this case they are refusing to offer any opinion in writing to the industry on what should be allowed and why, and instead are engaging in intimidation tactics behind closed doors. Whatever their theory is here, it feels like a reach/land grab vs other regulators,” wrote Armstrong. The SEC’s actions, he contends, have also not been placed upon other crypto companies in the lending space.

So what exactly is the Lend program at the center of this firestorm? At its core, it allows users to earn interest on their crypto holdings. While it has yet to launch, the product offers 4% yield when consumers lend their USD Coin, a cryptocurrency that stays stable in price as it is backed by the U.S. dollar, to Coinbase. Coinbase in turn lends that crypto out to other borrowers and guarantees the principal. On its website, Coinbase touts the product’s high yield in comparison to other bank saving accounts that are largely offering less than 1% yields on deposits. 

It may seem mundane, but this comparison is important. It is at the heart of the debate: On one end, Coinbase’s product looks like a bank interest account—accounts that aren’t facing the same regulatory scrutiny as the crypto exchange. But it goes deeper than that. While the SEC has yet to respond to a request for comment from Term Sheet, we can look to a prior incident for clues on why Coinbase is getting heat. 

As Bloomberg notes, regulators in five states have issued warnings against products with a similar bent from BlockFi Lending, accusing the company of violating local securities law. Effectively, bank interest accounts are generally insured in some way by the FDIC—making them less risky. BlockFi’s product however sits in the newer space of crypto and is from a nonbank. Meanwhile, the definition of security is rather broad, as Preston J. Bryne, a lawyer at Anderson Kill, writes for Coindesk, encompassing any note, stock, treasury stock, security future, security-based swap, bond…” you get, it goes on. “‘Yield’ products are securities. They differ in no material respect from an unsecured bond. They just don’t use the name,” he continued in a more recent tweet on Coinbase’s Lend product.

Which means all this is worth watching because Coinbase’s case could have broader implications too for the industry, and those in the crypto lending business.

I also can’t help but wonder how this plays out for SEC Chair Gary Gensler and the Biden administration’s legacy within the crypto community. Many in crypto voiced optimism, dubbing Gensler as a crypto-friendly option (prior to Gensler’s appointment, Coinbase’s Grewal had said he was “cautiously optimistic” over the new crew in Washington D.C.). But as the industry has ballooned beyond recognition, regulators have been clear to show that they are not the hands-off aunts and uncles of the industry. 

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Lucinda Shen

Jessica Mathews compiled the IPO and SPAC sections of this newsletter.


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- MNT-Halan, an Egypt-based fintech, raised about $120 million from investors including Apis Growth Fund II, Development Partners International, and Lorax Capital Partners.

- Beauty Pie, a high-end beauty and wellness products company, raised $100 million in Series B funding. Index Ventures and Insight Partners led the round.

- Marshmallow, a London-based insurance company, raised $85 million in additional funding valuing it at $1.25 billion. Investors include Passion Capital, Investec, and Scor.

- Emulate, a Boston-based in vitro biotech, raised $82 million in Series E funding. Northpond Ventures led the round and was joined by investors including Perceptive Advisors.

- SingleStore, a San Francisco-based database for data-intensive applications, raised $80 million in Series F funding. Insight Partners led the round and was joined by investors including Hewlett Packard Enterprise, Khosla Ventures, Dell Capital, Rev IV, Glynn Capital, and Google Ventures.

- Owlstone Medical, a U.K.-based early disease detection and precision medicine company, raised $58 million in funding. Horizons Ventures led the round.

- Leap, a San Francisco and Bangalore-based study abroad startup, raised $55 million. Owl Ventures led the round and was joined by investors including Harvard Management Company.

- CookUnity, a Brooklyn-based chef-to-consumer meal subscription platform, raised $47 million in Series B funding. Insight Partners led the round and was joined by investors including Endeavor Capital, IDCV, Fuel Ventures, and Gaingels.

- Sunday, a Thailand-based insurtech focused on Indonesia, raised $45 million in Series B funding. Investors included Tencent, KSK Ventures, OSK-SBI Ventures, SCB 10X, Vertex, Quona Capital, Granite Oak, Aflac Ventures, and Z Venture Capital.  

- Cohere, a Toronto-based API company, raised $40 million in Series A funding. Index Ventures led the round and was joined by investors including Section 32 and Radical Ventures.

- unitQ, a maker of a data platform for products, raised $30 million in Series B funding. Accel led the round and was joined by investors including Creandum and Gradient Ventures. 

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- Jetty, a New York City-based rent flexibility-focused fintech, raised $23 million. Citi Ventures and Flourish Ventures led.

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- Vowel, a New York City-based virtual meeting company, raised $13.5 million. David Hornik of Lobby Capital led the round.

- Zeotap, a Berlin-based customer data platform, raised $11 million in extended Series C funding. Investors include Liberty Global Ventures.

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- Tiled, a San Diego-based content creation platform, raised $13.7 million in Series A funding. Signal Peak Ventures led the round and was joined by investors including Seismic, Adobe, and University Growth Fund.

- Novi, a San Francisco-based B2B marketplace, raised $10.3 million in Series A funding. Mike Duboe at Greylock led the round. 

- Accure, a Germany-based provider of battery safety software for utility, home, and automotive uses, raised $8 million in Series A funding led by Blue Bear Capital

- Roar Studios, a Los Angeles-based music recording and practice social platform founded by Eric Reid, raised $7 million. Investors include Galaxy Interactive, Todd Wagner, and Scott Barger.

- Biller Genie, a Miami-based accounts receivables automation platform, raised $3.5 million in seed funding. Henry Helgeson led the round.

- Satisfi Labs, a A.I. conversation startup raised $3 million in Series A funding from Florida Funders’ Fund 2.

-, a Los Angeles-based platform for making music, raised $4 million in funding. Investors include Greycroft, Chicago Ventures, Slow Ventures, firstminute, Steven Galanis, Randi Zuckerberg, Mr. Beasts' Night media, Sophia Bendz (former Spotify CMO), Cyan Banister, T-Pain, and Zach Katz.


- Apax Funds and Warburg Pincus will acquire T-Mobile Netherlands, its Netherlands-based brands, for about $6 billion.

- Blackstone will acquire Chamberlain Group, an Oak Brook, Ill.-based maker of garage doors, from The Duchossois Group for about $5 billion.

- Apollo Global Management agreed to acquire up to a 50% equity stake in MaxCap Group, an Australasian commercial real estate financier and fund manager. Financial terms weren't disclosed.

- Battery Ventures acquired ifp Institut für Produktqualität (Institute for Product Quality), a Berlin-based provider of analytical testing and analysis services. Financial terms weren't disclosed.

- L Squared Capital Partners recapitalized Lumaverse Technologies, a Charlotte, N.C.-based management and engagement software maker for education, nonprofits and businesses. Financial terms weren't disclosed.

- Sovos, backed by Hg and TA Associates, acquired 1099 Pro, a Calabasas, Calif.-based provider of software and services for tax information reporting. Financial terms weren't disclosed.

- KKR invested in RainFocus, a Lehi, Ut.-based event marketing platform. Financial terms weren't disclosed.

- Polytek, backed by Arsenal Capital Partners, acquired Specialty Resin & Chemical, a  Dowagiac, Mich.-based maker of mold-making and casting products. Financial terms weren't disclosed.


- TopBuild (NYSE:BLD) will acquire Distribution International, a mechanical insulation distributor, for $1 billion from Advent International.

- Mastercard agreed to acquire Aiia, a European open banking, API technology provider. Financial terms weren't disclosed.

- Shutterstock (NYSE: SSTK) acquired PicMonkey, a SaaS-based photo editing and graphic design platform, for $110 million from Spectrum Equity.


- PayPal Holdings agreed to acquire Paidy, a Japanese buy now, pay later solution, for about $2.7 billion.

- Mars agreed to acquire PrettyLitter, a Los Angeles-based cat litter company, for about $500 million to $1 billion, per Bloomberg.

- Beijing’s municipal government denied a Bloomberg report that it was looking into a deal to put Didi Global, a Chinese ride-hailing giant, under state control.


- PHC Holdings, a Japanese medical device company, plans to raise about $1.8 billion in an IPO in the country, per Reuters.

- Thoughtworks Holding, a Chicago-based tech consultancy, plans to raise up to $736.8 million in an offering of 36.8 million shares priced between $18 and $20 per share. The company posted $803.4 million in revenue in 2020 and net income of $79.3 million. Apax Partners, Siemens AG, and GIC back the firm.

- Sportradar Group, a Switzerland-based sports data provider and sports betting company, plans to raise up to $532 million in an offering of 19 million shares priced between $25 and $28 per share. The company posted $478.8 million in 2020 and net income of $26.1 million. The Canada Pension Plan Investment Board backs the firm.

- Definitive Healthcare, a Framingham, Mass.-based healthcare data and analytics company, plans to raise up to $373.3 million in an offering of 15.6 million shares priced between $21 and $24 per share. The company posted net revenue of $118.3 million in 2020 and a net loss of $51.2 million. Advent International, Spectrum Equity, and 22C Capital back the firm.

- Procept Biorobotics, a Redwood City, Calif.-based surgical robotics company, plans to raise up to $132 million in an offering of 5.5 million shares priced between $22 and $24 per share. The company generated $7.7 million in revenue in 2020 and reported a net loss of $53 million. Fidelity Investments and Viking Global Investors back the firm.

- First Watch Restaurant Group, a Bradenton, Fla.-based breakfast and lunch restaurant chain, filed to go public. The company reported $342.4 million in total revenue in 2020 and a total comprehensive loss of $49.7 million. Advent International backs the firm.

- TDCX, a Singapore-based digital customer experience solutions company, filed for an initial public offering in the U.S. The company posted $323.4 million in revenue in 2020 and $64 million in profit. 

- HeartBeam, a Santa Clara, Calif.-based heart attack detection device company, filed for an initial public offering. The company reported a net loss of $1.1 million in 2020 and has yet to post revenue.


- Lamar Partnering Corporation, a blank check company focused on digital media, advertising technology or international advertising, and distributed energy and wireless communications infrastructure, plans to raise $300 million in an initial public offering. The SPAC will be led by Lamar Advertising Company executives Ross Reilly and Joe O’Brien.


- 10T Holdings, a mid-to-late-stage private equity firm, raised approximately $750 million for its inaugural growth equity funds and related co-investment and sub-advised vehicles.

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