KuCoin Sued by New York AG: All You Need to Know
- New York state Attorney General Letitia James filed a lawsuit against KuCoin for the sale of securities and commodities without being registered in NY.
- James seeks to stop KuCoin from operating in New York and to block access to its website until it complies with the law.”
- The lawsuit is the first time that Ether (ETH) has been considered a security and compared to the likes of LUNA and UST.
- James has asked the court to make KuCoin subject to geoblocking and block access to the mobile application and website of the crypto exchange.
- The exchange has yet to respond to the subpoena issued by the Office of the Attorney General (OAG).
Popular crypto exchange KuCoin has been trying to boost its trading volume amid the crypto market downturn that has got investors’ riled up for quite some time. Moreover, the fourth largest crypto exchange by spot trading volume made headlines on March 9 after the New York state Attorney General, Letitia James, filed a lawsuit against the exchange for the sale of securities and commodities without being registered to do so.
According to a statement released by authorities, James “continued her efforts to crack down on unregistered cryptocurrency platforms by filing a lawsuit against KuCoin for failing to register as a securities and commodities broker-dealer and falsely representing itself as an exchange.” It is crucial to note that the Office of the Attorney General (OAG) was able to buy and sell cryptocurrencies on KuCoin, which is not registered to operate in New York.
The announcement added that “through this enforcement action, Attorney General James seeks to stop KuCoin from operating in New York and to block access to its website until it complies with the law.” AG James filed the suit in the Supreme Court of the State of New York County and alleged that the Seychelles-based crypto exchange violated securities law when it “sold, offered to sell, purchased, and offered to purchase cryptocurrencies that are commodities and securities” to New Yorkers without being registered with the OAG’s office.
James also stated in the complaint that KuCoin “wrongfully represented itself as an “exchange” without appropriate registration or designation in violation of New York law while targeting the KuCoin Earn program, “a security in which KuCoin pooled investors’ cryptocurrencies to generate income for both itself and investors.”
The lawsuit claims that under New York’s Martin Act and “both state and federal authority, ETH, LUNA, and UST are commodities,” and KuCoin did not register itself as a commodities broker. Moreover, “ETH, LUNA, UST, and KuCoin Earn are each securities under Waldstein,” a test created in 1936 by the New York Supreme Court of Albany County.
James also wants the court to direct the crypto exchange “to implement geoblocking based on IP addresses and GPS location to prevent access to KuCoin’s mobile app, website, and services from New York.”
“KuCoin has not responded to the OAG’s subpoena. KuCoin has demonstrated no effort to comply with New York law, while continuing to provide its services to New Yorkers. Indeed, KuCoin has been the subject of repeated regulatory action internationally, and yet continues to flout its registration obligations,” read the complaint.
Interestingly, this action is one of the first times a regulator has claimed in court that ETH is a security, and the complaint seeks a permanent injunction against KuCoin for “selling and buying securities and commodities to and from New Yorkers.”
James took to the social media platform Twitter to confirm the lawsuit, adding that this is the “eighth action to rein in shadowy cryptocurrency platforms that disregard our laws and put New Yorkers at risk.”
On the other hand, some members of the crypto community were furious with the action taken by James, asking her to “stop ‘protecting’ us” while the others were against the fact that ETH can be clubbed together with LUNA/UST.