US-based cryptocurrency exchange Coinbase has announced that it will temporarily suspend customers from staking additional assets in four states amid legal proceedings by local regulators.
In a July 14th blog post, Coinbase Said Users in California, New Jersey, South Carolina, and Wisconsin are restricted from using certain staking services until further notice. After the U.S. Securities and Exchange Commission filed a lawsuit against cryptocurrency exchanges in June for offering unregistered securities, regulators in 10 U.S. states have launched their own legal proceedings, with some urged to stop the service.
Coinbase said it “strongly opposes any claim that our staking service is a security.” “But we will fully comply with preliminary state orders where necessary, even before we have the opportunity to defend ourselves.”
According to Coinbase, only regulatory actions in California, New Jersey, South Carolina and Wisconsin have called for a moratorium on staking additional assets. Users based in Alabama, Illinois, Kentucky, Maryland, Vermont and Washington are “eligible to stake cryptocurrencies as before.”
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The announcement follows the first pre-petition hearing in the SEC lawsuit against Coinbase. The commission filed a lawsuit on June 6, accusing the cryptocurrency exchange of operating as an unregistered security broker since 2019, but Coinbase has largely denied all allegations.
State and federal regulators are pursuing other cryptocurrency companies for staking purposes, alleging their services violate securities laws. In February, Kraken reached a $30 million settlement with the SEC seeking to stop offering staking services and programs to U.S. customers.
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