The US Securities and Exchange Commission (SEC) recently filed a lawsuit against cryptocurrency exchange Coinbase, claiming that its individual crypto staking service violated securities laws by considering the service itself as a security. In response, the giant crypto exchange announced that it would suspend its crypto staking service in four states, including California and New Jersey.
Coinbase’s Crypto Staking Service Suspended in 4 States
Coinbase, the US-based leading cryptocurrency exchange, which became the world’s largest crypto exchange in terms of trading volume in early June along with Binance, became the target of the SEC lawsuit. The SEC alleges that Coinbase’s crypto staking service violates securities laws.
Following ongoing reviews of these types of crypto staking services in California, New Jersey, South Carolina, and Wisconsin, Coinbase decided to suspend its individual crypto staking service in these states, stating that changes to these services would be required. However, it was announced that staked cryptocurrencies would remain unaffected until any enforcement orders were received from the states.
In an official blog post published on July 14, the cryptocurrency exchange stated, “We strongly disagree with the allegations that our crypto staking services violate securities laws or that staking is a security.” The post also added, “However, while we disagree with these claims, we will fully comply with any enforcement orders served upon us, even if we don’t have the opportunity to defend ourselves.”
Targeted by Securities Regulators in 10 States
Last month, the SEC filed a lawsuit against Coinbase, classifying the crypto staking service as well as many of the listed cryptocurrencies as securities. On the same day, securities regulators in ten states took action against Coinbase and initiated their own investigations.
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