Coinbase Faces Temporary Glitch in ETH Staking Rewards Distribution Amidst SEC Scrutiny
Technical Issue Briefly Halts Distribution of Rewards as Coinbase Continues to Navigate SEC Inquiry
Thu, 18 May 2023, 06:36 am UTC
On Tuesday, a small technical snag led Coinbase to momentarily halt the distribution of ETH staking rewards. The popular cryptocurrency exchange reassured its customers that their rewards remain intact and will be dispensed as soon as the glitch is rectified, a process that could take up to three days.
Coinbase's staking service is a user-friendly portal for individuals to engage in staking ETH and other proof-of-stake cryptocurrencies. This service enables the deposited cryptocurrencies to contribute to the security of their respective blockchains, with the reward being additional crypto payouts.
An advantage of Coinbase's staking service is the lack of a 32 ETH – around $58,300 – minimum deposit requirement, making it a feasible option for users who aren't capable of individual staking, which demands such hefty deposits.
However, staking services in the US, including Coinbase's, have attracted the attention of the Securities and Exchange Commission (SEC) this year. The SEC alleges these services violate securities laws. Earlier this year, Kraken, another exchange, was hit with a $30 million fine by the SEC for not registering its staking service and was compelled to discontinue its operations before it could enable ETH staking withdrawals.
Coinbase, while not officially accused yet, did receive a Wells Notice from the SEC in March, implying potential securities violations. The exchange inferred that the commission could have issues with several of its services, including its staking service.
In response, Coinbase has contended that its staking service doesn't fall within the purview of securities offerings. The company has also expressed its readiness to confront the SEC in court if required. Additionally, Coinbase has appealed to the court to mandate the SEC to provide clear guidelines concerning crypto assets, a request that the SEC sought to dismiss on Tuesday.
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