Kucoin Sued By New York Attorney And Asks For A Permanent Ban, ETH Is A Security

Key Points:

• Kucoin was sued for failing to comply with state registration regulations before allowing investors to buy and sell cryptocurrencies on their platform.
• District Attorney James requested a permanent injunction to prevent KuCoin from operating in New York until it complies with the law.
• The complaint also claims that Ethereum (ETH) – the second largest coin in the crypto market – is unregistered security.
• As of the time of writing, KuCoin has yet to respond to the subpoena from the NYAG.

Earlier this morning, Kucoin was denounced by notorious New York lawyer Letitia James for not complying with the state’s registration regulations before allowing investors to buy and sell cryptocurrencies on their platform.

This is part of attorney Letitia James’ attempt to take control of shadow crypto companies. Recently, Letitia James made a similar allegation against CoinEx. The office also alleged fraud against former Celsius CEO Alex Mashinsky in January 2023 and issued a $45 million fine to Nexo around the same time.

She said that KuCoin violated the Martin Act, a powerful securities law of the state, by trading in cryptocurrency, selling the product “KuCoin Earn” to generate income for itself and its investors, and calling itself an “exchange” falsely.

The attorney general’s office also wants this exchange to provide the identities of those who participated in the purchase of securities or commodities on the exchange six years ago.

Ms. James argued that the New York Attorney General’s Office (NYAG) was able to trade cryptocurrencies on KuCoin in New York, even though the company failed to fulfill its registration obligations with the NYAG, the Securities and Exchange Commission and United States Exchange (SEC) as well as the Asset Futures Trading Commission (CFTC).

The complaint also claims that Ethereum (ETH) – the second largest coin in the crypto market – is unregistered security.

“ETH, just like LUNA and UST, is a speculative asset that relies on the efforts of third-party developers to provide profit to the holders of ETH. Because of that, KuCoin was required to register before selling ETH, LUNA, or UST.” Written petition.

The New York government even accused the Ethereum Foundation’s 2015 ICO of Ethereum as a disguised securities sale.

Not stopping there, Ms. James also accused KuCoin of disobeying a subpoena from her office on January 23. The NYAG expects the court to issue an order to “lockdown” KuCoin’s New York business, block access to the website, and get back the money the floor has earned from services in the state.

As of the time of writing, KuCoin has yet to respond to the subpoena from the NYAG. But the lawsuit is causing the crypto market to wobble on the morning of March 10.

KuCoin launched in September 2017 with over 27 million users across 207 countries and regions. According to data firm CoinMarketCap, KuCoin is behind Binance, Coinbase, and Kraken regarding trading volume on crypto exchanges. In May of last year, this exchange raised $150 million, bringing its value to $10 billion.

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