Coinbase’s regulatory troubles worsened on Tuesday as Alabama state securities watchdog alleged that crypto exchange violated securities law by offering its staking rewards programme to state residents without registration. The Alabama Securities Commission (ASC) in a statementnoted that it issued a ‘show cause’ order to Coinbase in partnership with nine other state watchdogs.
The order gives Coinbase 28 days to defend why it should not be slammed with a cease-and-desist order for selling unregistered securities in Alabama. The nine other securities regulators involved in the order are from California, Illinois, Kentucky, Maryland and New Jersey. Also included are state regulatory authorities from South Carolina, Vermont, Washington and Wisconsin.
Coinbase Faces New Headwind
The latest action comes hours after the Securities and Exchange Commission (SEC) filed a lawsuit against Coinbase, alleging that the exchange operates an illegal trading platform and runs a crypto staking-as-a-service programme without authorization.
SEC also pushed against Binance earlier on Monday, alleging that the world's largest cryptocurrency exchange is operating an illegal trading platforms in the United States, offering unregistered crypto asset securities and commingling customers’ funds.
According to ASC, Coinbase manages about 3.5 million staking rewards programme accounts across the United States. However, these accounts are neither insured by the Federal Deposit Insurance Corporation (FDIC) nor the Securities Investor Protection Corporation (SIPC).
“There is no protection from loss for any of these accounts, including the more than 33, 000 accounts currently held by Alabama investors,” the state securities watchdog said.
However, ASC clarified that its action is not directed at preventing Coinbase from offering crypto staking to users in the state but to ensure compliance with the state’s laws through registration.
“The purpose of registering an offer and sale of securities, in part, is to ensure that investors receive all material information needed to evaluate the risks of participating in an investment, including in a staking rewards programme,” the regulator explained.
The state taskforce’s action is the latest in regulatory push back against crypto firms for offering digital assets--considered unregistered securities by US regulators--through crypto staking offerings or programmes. Earlier in February, crypto exchange Kraken shut down its staking service after reaching a $30 million settlement with the SEC.
Citi chooses NetDania; FMA warns against imposter; read today's news nuggets.
This article was written by Solomon Oladipupo at www.financemagnates.com.
You can get bonuses upto $100 FREE BONUS when you:
💰 Install these recommended apps:
💲 SocialGood - 100% Crypto Back on Everyday Shopping
💲 xPortal - The DeFi For The Next Billion
💲 CryptoTab Browser - Lightweight, fast, and ready to mine!
💰 Register on these recommended exchanges:
🟡 Binance🟡 Bitfinex🟡 Bitmart🟡 Bittrex🟡 Bitget
🟡 CoinEx🟡 Crypto.com🟡 Gate.io🟡 Huobi🟡 Kucoin.
Comments