- The NY state AG was able to buy and sell crypto on KuCoin.
- KuCoin is however not registered in New York.
- This is the AG’s eighth lawsuit against shadowy cryptocurrency platforms.
Letitia James, the New York state Attorney General, has announced that she has filed a lawsuit against KuCoin for issuing crypto services in New York without registration.
James says that she was able to buy and sell cryptocurrencies on the Seychelles-based cryptocurrency exchange despite the fact that it has not been registered in New York as a securities broker or dealer.
Violating securities law
In the suit filed on March 9 at the Supreme Court of the State of New York County, James also alleges that KuCoin violated securities law by selling and offering to sell and purchase and purchasing cryptocurrencies that are securities and commodities to New Yorkers without first seeking registration.
In addition, the lawsuit also alleges that KuCoin error by selling its KuCoin Earn product. The AG has labelled this product as a security that has not been registered.
There are also allegations that KuCoin misrepresented itself since it hasn’t registered itself as one to be allowed to function as one.
I’m suing cryptocurrency platform @kucoincom for illegally operating in New York without registering with the state.
This is our eighth action to rein in shadowy cryptocurrency platforms that disregard our laws and put New Yorkers at risk.
— NY AG James (@NewYorkStateAG) March 9, 2023
James cites Ethereum as security in the lawsuit
The New York AG’s suit also states that under the state and federal authority, LUNA, UST and ETH are categorized as commodities under the state’s Martin Act and that KuCoin filed to register as a commodities broker.
It is the first time the AG has referred to Ethereum’s Ether (ETH) as a security although there have been similar allegations by people in other regulatory authorities in the US.
KuCoin’s native token KCS drops 5.7%
The price of KCS, the native token of KuCoin, has plunged 5.78% partly buoyed by the recent developments.
KuCoin is ranked the fifth largest cryptocurrency exchange if found guilty could be liable to a fine as was the case with Kraken, one of the leading US-based cryptocurrency exchanges, which was fined by the Commodity Futures Trading Commission (CFTC) for offering unregulated crypto investment products.