United States-based cryptocurrency exchange Coinbase has announced it will be temporarily stopping customers from staking additional assets in four states amid legal proceedings from local regulators.
In a July 14 blog post, Coinbase said users in California, New Jersey, South Carolina, and Wisconsin would be restricted from using certain staking services until further notice. Following the U.S. Securities and Exchange Commission filing a lawsuit against the crypto exchange in June for offering unregistered securities, regulatory bodies in 10 U.S. states started their own legal proceedings, prompting the suspension of certain services.
“We strongly disagree with any allegation that our staking services are securities,” said Coinbase. “But we will fully comply with the preliminary state orders where required, even though that comes before we’ve had an opportunity to defend ourselves.”
According to Coinbase, only the regulators’ actions in California, New Jersey, South Carolina, and Wisconsin require the pause in staking additional assets. Users based in Alabama, Illinois, Kentucky, Maryland, Vermont, and Washington are “eligible to stake crypto just as they were before”.
1/ As you might have heard, on June 6, 10 US states initiated proceedings related to Coinbase’s retail staking services. Let’s dig into what this means for our customers. pic.twitter.com/pQidr0Ijc9
— Coinbase ️ (@coinbase) July 14, 2023
The announcement followed the first pre-motion hearing in the SEC’s case against Coinbase. The commission filed the lawsuit on June 6 alleging the crypto exchange has operated as an unregistered security broker since 2019. Coinbase has largely denied all the allegations.
State and federal regulators have gone after other crypto firms for staking, claiming the services violated securities laws. In February, Kraken reached a $30-million settlement with the SEC requiring it stop offering staking services or programs to U.S. clients.