Secretary of State Giannoulias Charges Coinbase in Groundbreaking Suit
Illinois is among 10 states initiating
legal actions against crypto exchange for violating securities laws
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[June 07, 2023]
Illinois Secretary of State Alexi Giannoulias and other
state regulators have taken legal action against crypto exchange
platform Coinbase Global, Inc. and Coinbase, Inc. for violations of
securities laws.
“This action will protect consumers and investors to ensure they can
make informed and safe decisions in Illinois and across the nation,”
Giannoulias said. “Illinoisans who invest their money in Coinbase or any
other digital asset trading business deserve both security and
transparency and my office intends to hold crypto companies to the
highest standards.”
The Illinois Secretary of State’s Securities Department is a member of a
task force alongside nine other state securities regulators charging
Coinbase for its violation of securities laws in connection with the
company’s staking offerings.
![](http://archives.lincolndailynews.com/2023/Jun/07/images/ads/current/debbiesfloral_lda_060123.png)
Staking is the process of holding a certain number of digital assets on
a blockchain to facilitate processing transactions and to earn a return
on the investment. Coinbase operated staking offerings where small to
mid-sized investors could turn over their assets to Coinbase, which in
turn would manage the process of staking and then takes a cut of the
profits before sharing them with investors.
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This action alleges Coinbase failed to register its staking
offerings with the Securities Department. Registration would have
given Illinoisans considering investing their money with Coinbase
the opportunity to evaluate the risks involved and compare
Coinbase's staking offerings with other investments. Registering an
offer or sale of securities ensures investors receive all material
information needed to evaluate the risks of participating in an
investment, including in staking offerings.
The Secretary of State Securities Department determined Coinbase
offered its staking offerings to Illinois residents without
registering those securities. Of Coinbase’s nearly 3.5 million
accounts holding staking offerings, over 140,000 were issued to
Illinois investors. Additionally, Coinbase is not a member of the
FDIC or SIPC, which means investors are not protected from
Coinbase's losses.
A copy of the Illinois Secretary of State Securities Department’s
Notice of Hearing can be reviewed
here.
Other states on this task force include California, Kentucky,
Maryland, New Jersey, Alabama, South Carolina, Vermont, Washington,
and Wisconsin.
Investors of Coinbase with complaints about their staking offerings
may file a complaint with the Securities Department
here. Investors should also reach out to the Securities
Department at 1-800-628-7937 to check the registration status of a
firm before investing their money in staking offerings.
The Securities Department licenses and regulates financial services,
including investment advisers, loan brokers, and business brokers.
For more information about the Securities Department, visit its
website
here. |