According to a statement published by the Alabama Securities Commission on June 6, a multi-state task force comprising of state regulators from Alabama, California, Illinois, Kentucky, Maryland, New Jersey, South Caroline, Vermont, Washington, and Wisconsin have issued a Show Cause Order against cryptocurrency exchange Coinbase. The order alleges that “Coinbase violates the securities law by offering its staking rewards program accounts to Alabama residents without a registration to offer or sell these securities.”
In particular, the order gives Coinbase 28 days to show cause why they should not be directed to cease and desist from selling unregistered securities in Alabama. The same day, Coinbase received a lawsuit notice from the U.S. Securities and Exchange Commission alleging the offering of unregistered securities. According to regulators:
“Coinbase takes a cut of those [staking] profits before sharing them with investors. The ASC [Alabama Securities Commission] action does not prohibit Coinbase from offering staking as a service, so long as it complies with Alabama’s laws.”
Furthermore, the ASC said that Coinbase’s nearly 3.5 million staking rewards program accounts nationwide “are not insured by the Federal Deposit Insurance Corporation (FDIC) or Securities Investor Protection Corporation (SIPC).” As a result, regulators claim that…
