Coinbase Gets Another Attack From The US States After SEC Lawsuits

Key Points:

• As part of a multi-state task force of ten state securities authorities, the Alabama Securities Commission issued a show cause order to Coinbase.
• The exchange has 28 days to demonstrate why they should be permitted to conduct business in Alabama.
• The move comes at the same time as the Securities and Exchange Commission filed a federal lawsuit against Coinbase in New York.

In addition to the SEC’s action, which was filed today, ten states issued a show cause order against Coinbase.

Coinbase and its parent company have 28 days to demonstrate why they should be allowed to continue doing business in Alabama, according to a statement issued on June 6 by the Alabama Securities Commission, a multi-state task force comprised of state regulators from Alabama, California, Illinois, Kentucky, Maryland, New Jersey, South Carolina, Vermont, Washington, and Wisconsin.

According to the statement:

“Coinbase violates the securities law by offering its staking rewards program accounts to Alabama residents without a registration to offer or sell these securities.”

Moreover, the ASC said that Coinbase’s approximately 3.5 million staking rewards program accounts throughout the US “are not insured by the Federal Deposit Insurance Corporation (FDIC) or Securities Investor Protection Corporation (SIPC).”

As a consequence, officials allege that “no protection against loss exists for any of these accounts, including the over 33,000 accounts now owned by Alabama investors.”

The move comes at the same time as the Securities and Exchange Commission filed a federal lawsuit against Coinbase in New York, alleging that the business was working as an unregistered broker and exchange. In premarket trade on Tuesday, shares plunged more than 30%.

The agency also says that Coinbase “made available for trading crypto assets that are being offered and sold as investment contracts, and thus as securities,” according to a statement published a day after similar action was taken against Binance, the world’s biggest crypto exchange by market size.

The SEC has classified the tokens that power Solana, Cardano, Polygon, Filecoin, The Sandbox, Axie Infinity, Chiliz, Flow, Internet Computer, Near Protocol, Voyager, Dash, and Nexo as securities.

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Harold

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