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Bitcoin hovers around $46K, SEC threatens to sue Coinbase

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Yahoo Finance's Brian Sozzi and Julie Hyman break down Bitcoin's latest moves after El Salvador became the first country to make Bitcoin it's national currency as well as discuss the SEC's threats to sue Coinbase over the cryptocurrency exchange platform's lending plans.

Video Transcript

JULIE HYMAN: First, we are going to dig more into that crypto trade that we are seeing here this morning. And as I mentioned, Brian Sozzi, this happening even as El Salvador was formally adopting the use of Bitcoin as its currency. It has an app called Chivo that is used to trade the stuff and use it. It's being used at places like McDonald's and Starbucks in the country successfully, I might add. Although, there were some hiccups yesterday. The system had to be taken down for a little bit to solve some tech problems. There were some also hiccups it seemed with just crypto trading broadly there were some technical issues. But still with Bitcoin, you never quite know exactly what's really behind it.

BRIAN SOZZI: Right, Julie. I tweeted out a good photo this morning just looking at the sea of red on the Yahoo Finance Crypto page. I love that page. It's always very interesting. You list all the cryptos there. But it's not just dedicated to Bitcoin, but Bitcoin obviously gets the most attention. It continues to be hammered today and you're seeing it there in the charts, down about 9% below that 50,000 mark and we saw it really run higher above 51,000 into the El Salvador event.

And I've been talking to a lot of Bitcoin insiders this morning here, and really, I think what you're seeing with the sell off a lot of folks leveraged up their accounts to go out and buy Bitcoin thinking that the El Salvador rollout would go well. I'm not too sure why they did that. When you're trying to roll out Bitcoin in El Salvador, of course there's going to be glitches, and of course it's not going to work correct. Nonetheless, a lot of those leveraged trades are being unwound today, Julie. Also, some folks that I talked to this morning noting that the news on Coinbase-- we'll talk a little more about that-- that is not helping market sentiment as well either.

JULIE HYMAN: Yeah. Well, let's talk about Coinbase, shall we, because this is a really interesting story. The company received what's called a Wells notice from the Securities and Exchange Commission. It disclosed that. And it's related to a product it hasn't yet introduced called Lend, which is basically an interest-bearing account for crypto, for Bitcoin. Other companies have this. They too have received similar notices in the past from the SEC. But what's interesting here, Brian, is that Coinbase says, why are we getting this? It's not a product that exists yet. The SEC seems to see this as a security, and Coinbase is pleading a lot of confusion on this point. It said it complied with all of the requests from the SEC, but it doesn't understand what the SEC's issue is with this product.

BRIAN SOZZI: Yeah. And Coinbase CEO Brian Armstrong went on a 21 tweet thread yesterday, really questioning what the SEC is doing here. And then Mark Cuban, also a longtime Bitcoin evangelist, jumping in on this, and I think bringing up a very good point, Julie. Noting here-- I'm just reading it off some of the notes that I had here. Cuban noting this is "regulation via litigation," and Cuban making the argument that perhaps the SEC just can't or doesn't want to do its homework on Bitcoin so they're just going to come out here and threaten litigation as one way to regulate the crypto market. So very interesting to watch.

JULIE HYMAN: Yeah, although, you know, by all accounts Gary Gensler knows-- understands crypto, right, has taught about crypto in the past. So it's a bit confusing here. The SEC not always known, right, as the most transparent organization when it brings these kinds of actions. So hopefully at some point we will get a little bit more insight into what exactly they are after here.