Cryptocurrency exchange Coinbase sued by the SEC while the task force of 10 US states regulators investigating

The cryptocurrency exchange Coinbase is facing scrutiny from a task force of 10 US state securities regulators after it was sued by the US Securities and Exchange Commission (SEC) for allegedly selling unregistered securities.

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One day after the US Securities and Exchange Commission (SEC) accused Binance for securities fraud, the Coinbase, a largest US based cryptocurrency exchange, is sued by the SEC. The SEC alleges that cryptocurrency exchange has failed to register its services with the SEC as required by law, resulting in the company making billions of dollars unlawfully facilitating the buying and selling of crypto asset securities. In addition, the SEC alleges that since 2019, Coinbase has been engaging in an unregistered securities offering through its staking-as-a-service program. The SEC’s complaint seeks injunctive relief, disgorgement of ill-gotten gains plus interest, penalties, and other equitable relief.

Inside the suit, the SEC identified tokens issued by foundations and companies or tied to protocols including Solana (SOL), Cardano (ADA), Polygon (MATIC), and Nexo (NEXO) (to name only a few) as securities.

The SEC first warned Coinbase it might sue the cryptocurrency exchange earlier this year, sending a Wells Notice, which Coinbase responded to in April.

In the synchronized actions Coinbase is facing scrutiny from a task force of ten US state securities regulators. Namely in Illinois, Kentucky, Maryland, New Jersey, South Carolina, Vermont, Washington and Wisconsin. The Alabama Securities Commission (ASC) has ordered Coinbase to explain within 28 days how it is not violating state securities laws with its staking program.

The California Department of Financial Protection and Innovation (DFPI) has filed for an order for Coinbase to ‘desist and refrain from the further offer and sale of securities in California.’ The ASC and DFPI are motivated by a desire to protect consumers and investors in the decentralized finance space. The claims against Coinbase are that it is offering securities without a permit or other form of qualification in California and that it is violating state securities laws with its staking program.