According to the statement published by the Alabama Securities Commission on June 6, a multi-state task force consisting of state regulators from Alabama, California, Illinois, Kentucky, Maryland, New Jersey, South Carolina, Vermont, Washington, and Wisconsin issued a show of cause order against cryptocurrency exchange Coinbase. The warrant alleges that “Coinbase is in violation of securities law by offering its bounty program accounts to Alabama residents without registering to supply or sell these securities.”
Specifically, the order gives Coinbase 28 days to supply a reason why they should not be ordered to stop selling unregistered securities in Alabama. On the identical day, Coinbase received a lawsuit from the U.S. Securities and Exchange Commission alleging that it offered unregistered securities. According to the regulators:
“Coinbase is taking a few of them [staking] profits before sharing them with investors. ASC [Alabama Securities Commission] The motion doesn’t prohibit Coinbase from offering staking as a service so long as it’s permitted by Alabama law.”
Furthermore, the ASC stated that Coinbase’s nearly 3.5 million rewards program accounts nationwide “usually are not insured by the Federal Deposit Insurance Corporation (FDIC) or the Securities Investor Protection Corporation (SIPC).” As a result, regulators say there’s “no loss protection for any of those accounts, including over 33,000 accounts currently held by Alabama investors.”
Investors are encouraged to contact the ASC to substantiate the registration status of the rewards betting program before investing money.
At the identical time, the SEC’s lawsuit against Coinbase alleged that Coinbase never registered as a broker, national stock exchange, or clearing agency, thus avoiding the stock market disclosure scheme. Referring to Coinbase’s recent lawsuit, SEC Chairman Gary Gensler he said The cryptocurrency exchange allegedly deprived its customers of critical safeguards that prevent fraud and manipulation. Another cryptocurrency exchange, Kraken, previously settled with the SEC for $30 million over a US crypto betting program. Another SEC lawsuit against the Binance cryptocurrency exchange can be underway.
Magazine: Cryptocurrency Regulations: Does SEC Chairman Gary Gensler Have the Last Word?
