Coinbase, a cryptocurrency exchange based in the United States, has announced a temporary suspension of additional asset staking for customers in four states. This move comes as local regulators initiate legal proceedings against the company.
In a blog post on July 14, Coinbase stated that users in California, New Jersey, South Carolina, and Wisconsin would be unable to utilize certain staking services until further notice. Following a lawsuit filed by the US Securities and Exchange Commission (SEC) in June, accusing Coinbase of offering unregistered securities, regulatory bodies in ten states initiated their own legal actions. As a result, certain services have been temporarily suspended.
Coinbase expressed its disagreement with the allegation that their staking services qualify as securities, but noted their full compliance with preliminary state orders, despite not yet having the opportunity to present their defense.
The pause in staking additional assets is applicable only to the actions of regulators in California, New Jersey, South Carolina, and Wisconsin. Users from Alabama, Illinois, Kentucky, Maryland, Vermont, and Washington can continue to stake cryptocurrencies as they did before.
This announcement follows the first pre-motion hearing in the SEC's lawsuit against Coinbase, which was filed on June 6. The lawsuit accuses the exchange of operating as an unregistered security broker since 2019, an allegation that Coinbase has largely refuted.
Both state and federal regulators have targeted other cryptocurrency firms for offering staking services, citing violations of securities laws. In February, Kraken reached a $30 million settlement with the SEC, requiring the exchange to cease offering staking services or programs to its US clients.
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