Coinbase, a cryptocurrency exchange based in the United States recently made an announcement stating that it will temporarily halt customers from staking assets in four states due, to legal proceedings initiated by local regulators.
In a blog post on July 14 Coinbase informed its users in California, New Jersey, South Carolina and Wisconsin that they would not be able to use staking services until notice. After the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against the exchange in June for offering securities, regulatory bodies from ten U.S. States initiated their legal actions leading to the suspension of certain services.
While strongly disagreeing with the allegations that their staking services qualify as securities Coinbase expressed their commitment to fully comply with state orders wherever. This compliance takes place even before they have had an opportunity to defend themselves adequately.
Coinbase clarified that only the regulatory actions in California, New Jersey, South Carolina and Wisconsin require a pause in staking assets. Users in Alabama, Illinois, Kentucky, Maryland, Vermont and Washington can continue staking cryptocurrencies as they could before.
This announcement followed the premotion hearing in the SECs case, against Coinbase. The commission filed the lawsuit on June 6 accusing the exchange of operating as a security broker since 2019. Coinbase has largely refuted these allegations. Authorities, at both state and federal levels have taken actions, against cryptocurrency companies involved in staking alleging that these services have infringed securities laws. For instance in February Kraken entered into a settlement amounting to $30 million with the SEC. As part of the agreement Kraken was mandated to discontinue providing staking services or programs to clients based in the United States.