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- Coinbase urges five states to end lawsuits, claiming $90 million in staking rewards lost since June 2023.
- Lawsuits are causing confusion among consumers and increasing risks in the already volatile cryptocurrency market.
- Legal action continues despite relaxed stances from other regulators, with Oregon filing a new lawsuit.
Coinbase has asked California, New Jersey, Maryland, Washington, and Wisconsin to drop their legal actions against its staking services. The company also complains that these legal actions are negatively affecting consumers and are causing increased volatility within the cryptocurrency markets. Coinbase continues to argue that the legal case has adversely affected residents of those states and the rest of the country in terms of financial damage to the broader cryptocurrency market.
As stated by Coinbase in a blog post, while many of them have softened on their stance, these five states remain legal for individuals. The company has stated that these legal actions have resulted in the $90 million loss of staking incentives for users in those states from June 2023. This led to the cease-and-desist orders that have so far prohibited Coinbase from admitting new individuals into the staking services.
Legal Claims on Staking
The legal cases arise from claims that staking services offered by Coinbase fall under securities, under the federal US law. Both the SEC and several state regulators have claimed that Coinbase’s staking services are in violation of securities laws. However, five states that took Coinbase to court continued to ban its services. Although some other regulators relaxed on the issue.
Coinbase has also claimed that the cases are contrary to the emerging trend of a decline in enforcement. The company opines that such legal measures fail in the quest to safeguard consumer interests while only serving to complicate matters. And increase the risks being faced. According to Coinbase, the lawsuits are pointless and actually hampering the already complex legal issues surrounding cryptocurrency services.
Coinbase also highlighted that other large exchanges, including Kraken and Binance.US, have similar offerings for staking services. However, the extent to which these services can be offered depends on state laws. Coinbase noted that it’s not alone in experiencing such limitations, but the five states that have sued the platforms are highly focused on Coinbase.
Coinbase Criticizes Regulatory Challenges
The litigation process is still going on, and Oregon’s Attorney General, Dan Rayfield, has just filed another lawsuit. Oregon claims that Coinbase has not done enough to safeguard customers from unregistered and risky assets as the law requires. In response, Coinbase’s Chief Legal Officer, Paul Grewal, stated that the Oregon suit is a “copycat” of the earlier SEC action by regurgitating claims that have already been dropped.
This conflict between Coinbase and these states shows some challenges that regulators face in regulating crypto services. Due to the increasing legal disputes and concerns about digital assets, Coinbase and other companies demanded clarification of statutory regulation.
