New York Attorney General Letitia James has continued the crackdown on unregistered cryptocurrency platforms while suing Bitcoin and altcoin exchange KuCoin. The prosecutor also clarified in his complaint which altcoins they consider securities. According to the attorney general’s office, although KuCoin is not registered in the state, the company was able to buy and sell cryptocurrencies on its platform in New York. Here are the details…
Bitcoin and altcoin exchange sued
The New York Attorney General sued KuCoin for selling unregistered securities within state lines. With the enforcement action, Attorney General James is trying to stop KuCoin from operating in New York and block access to the website until it complies with the law. This latest action marks the eighth in a series of enforcement actions taken by Attorney General James against cryptocurrency platforms that cannot register with the government.
KuCoin is a cryptocurrency trading platform that allows traders to buy and sell cryptocurrencies through its website and app. Allegedly, the platform allows investors to trade securities and commodities, popular altcoin projects including ETH, LUNA, and TerraUSD (UST).
Ethereum is allegedly a security
This is one of the first cases where a regulator has claimed that ETH, one of the largest cryptocurrencies available, is a security in court. The petition argues that ETH is a speculative asset based on efforts by third-party developers like LUNA and UST to profit from ETH holders. As a result, KuCoin had to register with the state before selling ETH, LUNA or UST.
Allegedly, KuCoin also sells unregistered securities through its lending and staking product, KuCoin Earn. New York law requires securities and commodities brokers to register with the government, while KuCoin does not go through such a registration process. Using a computer with a New York-based IP address, the Attorney General was able to create an account with KuCoin and buy and sell coins for which KuCoin charges a fee. The office was also able to deposit cryptocurrencies into the KuCoin Earn product, for which KuCoin also charges a fee.
Additionally, KuCoin claims to be an exchange, but is not registered as a national stock exchange with the U.S. Securities and Exchange Commission (SEC) under the New York Law, or as appropriate by the U.S. Commodity Futures Trading Commission (CFTC), according to the Attorney General’s claims. not determined. KuCoin also failed to comply with a subpoena issued by the Attorney General’s Office to provide further information on crypto-asset trading activities in the state. KuCoin was found to operate in multiple jurisdictions, including Seychelles, Canada, and the Netherlands, without the proper license.
Previously, a lawsuit was filed against CoinEx.
Through this lawsuit, Attorney General James seeks a court order that prevents KuCoin from misrepresenting itself as an exchange, preventing the company from operating in New York City, and leading to geo-blocking based on IP addresses and GPS location to block access to KuCoin. This latest lawsuit continues Attorney General James’ efforts to enforce New York law in the cryptocurrency industry and protect New York investors.
cryptocoin.com In the past, Attorney General James has similarly filed suit against CoinEx for failing to register as a securities and commodities broker. It also got $24 million back from cryptocurrency platform Nexo for operating illegally and sued Celsius’s former CEO for defrauding investors and hiding the company’s bad financial situation. Attorney General James urges New Yorkers affected by deceptive behavior in the crypto-asset market to report these issues to his office. It also encourages anyone who may have witnessed abuse or fraud in the cryptocurrency industry to file a complaint.
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