Alabama Securities Regulator Targets Coinbase Staking Program

June 6, 2023: Coinbase, a popular cryptocurrency platform, faces legal action from the (SEC) and ten states, including Alabama. The Alabama Securities Commission has issued a show cause order to Coinbase, giving them 28 days to explain -why they should not be ordered to stop selling unregistered securities in Alabama.

The state task force, consisting of securities regulators from California, Illinois, Kentucky, Maryland, New Jersey, South Carolina, Vermont, Washington, and Wisconsin, is also involved in this action.

Alabama’s show cause order claims that Coinbase violates securities laws by offering its staking rewards program to residents of Alabama without proper registration. The order also highlights that the 3.5 million staking rewards program accounts nationwide are not protected by the FDIC or the Securities Investor Protection Corporation (SIPC), which means investors are at risk of losses.

Coinbase’s staking program allows users to earn rewards by staking five different cryptocurrencies: XTZ, ATOM, ETH, ADA, and SOL.

The SEC’s lawsuit specifically targets Coinbase’s staking program, asserting that it qualifies as an investment contract and security. The lawsuit claims that the staking program for each of the five assets falls under the definition of an investment contract and should have been registered under the Securities Act.

Read more – SEC Files Lawsuit Against Coinbase for Unregistered Securities Exchange Activities