Moments after the US Securities & Exchange Commission came after Coinbase for offering unregistered products and services, several US states have taken it upon themselves to pursue the allegations individually as well. Simply put, Coinabse is now facing more trouble with US states joining forces with the SEC. Needless to say, industry experts are out in the light for self-defense, saying that these are nothing but premeditated coordinated attacks.
Paul Grewal, the Chief Legal Officer of Coinbase, has said that allegations by the SEC in the absence of a clear set of crypto guidelines will hurt companies like Coinbase that have always been committed to compliance.
Binance is another company that has come under the scrutiny of the SEC.Official representatives of Coinbase have sent a message that they are willing to have a productive conversation with regulators to prove that the staking service is not secure under federal or state law.
Conversations will have to wait since Coinbase only has 28 days to come clean in its defense and prove why it should be allowed to operate in US states that are pursuing actions against it. There is a possibility that the crypto venture will be allowed to function but will be under the umbrella of various restrictions. Questions that Coinbase may have to answer will be about its commission size and associated disclosures.
Richard Mico, the CEO & CLO of Banxa US, has called this a concerted effort, adding that they will have a better understanding in the coming weeks. Richard believes he has a reason to understand that these are coordinated attacks that were planned in advance.
Another expert, Adam Cochran from Cinneamhain Ventures, has taken a different stand by saying that offering unregistered securities is just a small issue when compared to the rest of the lawsuit by the SEC. The US states to take up the matter are New Jersey, Illinois, and Maryland, to mention a few.
Authorities in New Jersey have expressed their intention of levying a fine worth $5 million against the venture for offering unregistered securities. This is a part of the order, which is also taking up an issue with its staking program.
Illinois has sent a notice to Coinbase for a hearing scheduled on August 08, of which Coinbase Global will also be a part. If proven true, Coinbase will be liable to pay a fine of $10,000 for every violation.
Maryland has sent a show cause notice, asking Coinbase to prove why it should not be barred from offering its products in the region.
The SEC, in specific, has sought an explanation from Coinbase on three fronts. These are:
- Offering unregistered securities
- Serving as an intermediary to customers for crypto transactions
- Conducting the business of effecting securities transactions
Additionally, the staking-as-a-service program by Coinbase is under scrutiny by the SEC. US states are likely to target that as well.