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Cryptocurrency exchange Coinbase has been issued a Show Cause Order by the Alabama Securities and Exchange Commission (ASC) along with ten other states, early Tuesday morning.
A multi-state task force that includes California, Illinois, Kentucky, Maryland, New Jersey, South Carolina, Vermont, Washington, Wisconsin along with Alabama have filed charges against the company for violating securities laws.
The SEC announced a new lawsuit today against Coinbase for allegedly violating securities laws by acting as an unregistered exchange, broker, and clearing agency. The government watchdog ended their press release today claiming it “appreciated the assistance” lent by the above-mentioned task force in those charges.
According to the authorities, Coinbase offered certain staking programs to residents of these eleven states without a registration to sell cryptocurrencies–or securities, according to the U.S. Government.
Although Coinbase or other companies are not prohibited from offering staking, they must comply with state laws, said officials from the ASC, in today’s press release.
Today’s Show Cause Order gives the company 28 days to “show cause” as to why they should not be directed to cease and desist from selling cryptocurrencies in those states. In other words, Coinbase must prove they aren’t selling unregistered securities.
Amanda Senn, Director of the ASC, said that [the agency] is “committed to protecting Alabama consumers and investors, including those who choose to invest in the decentralized finance space.” She added that today’s action is “another step toward ensuring that investors in crypto asset products are offered the same protections under our laws.”
The Department of Financial Protection and Innovation for California went on to offer factual background. According to their estimates, Coinbase has been involved in the offering and selling of unregistered securities as early as November, 2019.
Yesterday was an already turbulent day for the cryptocurrency markets, after the world’s largest cryptocurrency exchange, Binance and its CEO Changpeng Zhao, were sued by the SEC for allegedly violating U.S. securities laws.
Amid today’s coordinated actions, Coinbase, which trades on the Nasdaq under the COIN ticker, has seen its shares fall more than 13%, trading as of writing at $50.68.