New York AG Sues KuCoin, Claims ETH, LUNA, UST Securities and Commodities
This Thursday, New York Attorney General Letitia James filed a lawsuit against the cryptocurrency exchange KuCoin. According to the lawsuit, the company operated as a commodities broker-dealer and securities broker and dealer without properly registering. Interestingly, the document terms digital assets like ETH, LUNA, and UST as commodities and securities. It also identifies KuCoin’s Earn product as an unregistered securities offering.
New York Attorney General Sues KuCoin
On Thursday, March 9th, New York Attorney General Letitia James filed a lawsuit against KuCoin. The cryptocurrency exchange is alleged to have operated both as a commodities broker-dealer and a securities broker and dealer without registering with the state. In a move harkening to Gary Gensler’s recent comments on staking and similar products, the document identifies KuCoin Earn as an unregistered securities offering.
The lawsuit also identifies UST, LUNA, and ETH as assets illegally offered by the cryptocurrency exchange. Interestingly, the Attorney General’s office doesn’t specify which if any of the given token tokens are securities or commodities but instead repeatedly bundles them together and states that “the tokens are commodities and securities under the Martin Act”.
The Attorney General is seeking to prevent KuCoin from operating in the state of New York in the future. The authorities are also demanding that the exchange provide “a full accounting of all New York accounts and all fees received from New York customers”. Lastly, the lawsuit is requesting penalties, disgorgement, and restitution.
Join our Telegram group and never miss a breaking digital asset story.
New York’s Offensive Against Crypto
Authorities in New York have increasingly found themselves in crypto-related headlines over the previous months. In late 2022, Attorney General Letitia James echoed the concerns previously expressed by an Elizabeth Warren-led group of senators and called on Congress to ban Bitcoin from retirement funds.
The Attorney General has also been at the forefront of multiple enforcement actions against cryptocurrency companies. In late February, the AG sued CoinEx for, much like in the case of KuCoin, violating the Martin Act, and failing to register with the SEC and the CFTC. New York state regulators have also been a part of broader actions targeting the digital asset industry.
In a dramatic week in mid-February, the New York Department of Financial Services (NYDFS) ordered Paxos to stop issuing the BInance-branded BUSD shortly before the company revealed it had also received a Wells notice from the SEC alleging that the stablecoin is a security. The Attorney General also recently joined the SEC in its objections to the acquisition deal between Binance.US and Voyager Digital.
Do you think ETH should be classified as a security, a commodity, or something else? Let us know in the comments below.