• New York Attorney General (NYAG) Letitia James has filed a lawsuit against crypto exchange KuCoin for allowing investors to buy and sell ETH without registering with the state.
• NYAG argues that Ethereum is a security, just like TerraUSD and LUNA, since it relies on third party developers to provide profits to holders.
• The AG seeks to stop KUCoin from operating in New York until it complies with the law and registers as a securities and commodities broker-dealer.
New York AG Files Lawsuit Against KuCoin
The New York Attorney General (NYAG) Letitia James has filed a lawsuit against cryptocurrency exchange KuCoin for allegedly allowing investors to buy and sell Ethereum (ETH) without registering with the state.
Ethereum is Considered Security by NYAG
The AG claims that Ethereum is a security, just like TerraUSD (UST) and LUNA, since it relies on third party developers to provide profits to holders. They argue that possession of ETH translates directly into profit potential by earning staking rewards through the proof of stake consensus mechanism.
KuCoin Accused of False Representation
The suit also accuses KuCoin of falsely representing itself as an exchange, trading non-registered securities, and operating in New York without registering with the state. The NYAG seeks to stop KUCoin from operating in New York until it complies with the law and registers as a securities and commodities broker-dealer.
NYAG’s Actions are Aimed at Regulating Crypto Industry
Attorney General Letitia James stated that this action is one of many steps taken towards regulating the cryptocurrency industry by her office. She said,“One by one my office is taking action against cryptocurrency companies that are brazenly disregarding our laws and putting investors at risk.“
Conclusion
This lawsuit highlights the need for crypto exchanges like KuCoin to comply with regulations before offering services in jurisdictions where they are not registered or recognized by financial regulatory bodies such as SEC or CFTC. It also serves as a reminder for investors to thoroughly research any platform they choose to use before investing their funds in cryptocurrencies or other digital assets.
