Ten states sue Coinbase for 'violating securities law' - on same day feds sue ... trends now
Ten states have taken legal action against Coinbase, accusing the country's largest crypto trading platform of profiting millions while exposing investors to significant risk.
A task force of regulators from the states initiated legal proceedings against the Coinbase on Tuesday, accusing the company of violating securities regulations in connection with the company's staking offerings.
The company is accused of failing to register its staking offerings with the Securities Departments of the 10 states- Alabama, California, Illinois, Kentucky, Maryland, New Jersey, South Carolina, Vermont, Washington and Wisconsin.
The states' regulators sent a show cause notice to regulators, meaning the company now has 28 days to justify why it should not be given an order to stop selling unregistered securities in each state.
'This action will protect consumers and investors to ensure they can make informed and safe decisions in Illinois and across the nation,' said Illinois' Secretary of State Alexi Giannoulias.
Ten states have accused Coinbase of profiting millions while exposing investors to significant risk. The company's CEO Brian Armstrong is pictured above
'Illinoisans who invest their money in Coinbase or any other digital asset trading business deserve both security and transparency and my office intends to hold crypto companies to the highest standards.'
Illinois' complaint accuses Coinbase of violating 'the securities law by offering its staking rewards program accounts to Alabama residents without a registration to offer or sell these securities.'
Staking is the strategic pledging of digital assets to confirm transactions in exchange for potential payment.
It also states that registration would have given the state's residents the opportunity to evaluate the risks involved and compare Coinbase's staking offerings with other investments.
Moreover, the complaint notes that Coinbase is not a member of the Federal Deposit Insurance Corporation or the Securities Investor Protection Corporation, which means investors are not protected from the company's losses.
The 10 states' legal action against Coinbase comes on the same day the Securities and Exchange Commission charged the company with violating securities laws.
In a civil complaint on Tuesday, the SEC accused Coinbase of operating its crypto trading platform as an unregistered national securities exchange, broker, and clearing agency.
The suit alleges that since 2019, Coinbase has made
