Blockchain gets cease and desist notices from 11 US states.
After the Securities and Exchanges Commission (SEC) filed a lawsuit, the US-based crypto exchange, blockchain, has received multiple Show Cause orders from US states.
The Alabama Securities and Exchange Commission (ASC), along with ten other US states, have filed charges against blockchain for violating securities laws.
States that joined the multi-state task force include Kentucky, Illinois, California, South Carolina, Washington, Vermont, Maryland, Wisconsin, New Jersey, and Alabama.
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Blockchain has 28 days to prove why it shouldn’t cease operating in 11 US states.
In a press release on June 6, the SEC announced that it is suing blockchain for operating as an unregistered securities exchange, broker, and clearing agency.
The watchdog alleges that the crypto exchange violated securities laws by offering several digital assets that were not registered under the Securities Exchange Act of 1934 and 1933.
The SEC has filed its complaint in the US District Court for the Southern District of New York, seeking injunctive relief, disgorgement of ill-gotten gains plus interest, penalties, and other equitable relief.
In the press release, the SEC also recognized the assistance from the multi-state task force of ten state securities regulators led by California.
According to the state regulators, blockchain operated some staking programs for residents in the eleven states without registering the underlying cryptocurrencies under US laws.
Alabama State Securities (ASC) officials said they did not prohibit blockchain and other firms from offering staking services. However, they must comply with state laws.
The multiple Show Cause Orders gave blockchain a 28-day mandate to say why it should not cease trading crypto in the states.
That means blockchain must prove with reasonable facts that its offerings are not unregistered securities.
Failure to do so, blockchain will have to cease operating in the states.
Committed to protecting US customers
Director of the ASC, Amanda Senn, said the state regulator is:
“committed to protecting Alabama consumers and investors, including those who chose to invest in the decentralized finance space.”
In addition, the director noted that the agencies’ action is another step toward ensuring that crypto investors have the same protection under US laws.
The California Department of Financial Protection and Innovation (DFPI) provided factual background for their accusations against the exchange.
According to the DFPI’s estimates, blockchain has been offering and selling unregistered securities since November 2019.
The cryptocurrency market was already under fire from the SEC’s lawsuit against Binance and its CEO on June 5 for violating US securities laws.
Even more disturbing is the SEC’s long list of crypto assets offered on blockchain, which the regulated tagged as “unregistered securities” offerings.
After news of the lawsuit broke out on June 6, Nasdaq-listed blockchain shares (COIN) declined over 12% and closed at $51.61 against the June 5 closing price of 58.705.
However, its price has recovered slightly by 2.88% and now trades at $53.09.