19 days ago 2 min read

KuCoin Sued By NY AG For Selling Commodities And Securities Without License


Letitia James, the attorney general for the state of New York, declared that she has filed a lawsuit against the unlicensed cryptocurrency exchange KuCoin after being able to buy and sell tokens there. Her office released a statement saying that "this case is one of the first times a regulator is arguing in court that ETH, one of the largest cryptocurrencies available, is a security.

KuCoin, which has its headquarters in the Seychelles, is accused of breaking the law when it "sold, offered to sell, purchased and offered to purchase cryptocurrencies that are commodities and securities" to residents of New York without first registering with the attorney general's office, according to the complaint, which was filed on March 9 in the Supreme Court of the State of New York County.

Also, KuCoin is charged with not having registered as a securities broker or dealer when it issued and sold its KuCoin Earn product, which the complaint refers to as a security. Additionally, it claims KuCoin misrepresented itself as an exchange because it was not registered to perform that role.

According to the lawsuit, the state's Martin Act defines ETH, LUNA, and UST as commodities, and KuCoin applied to register as a commodities dealer. According to the lawsuit, "ETH, LUNA, UST, and KuCoin Earn are each securities under Waldstein" (a standard set by the Albany County branch of the New York Supreme Court in 1936) and "under the Howey test," respectively. Furthermore:

“The Howey test is applicable to the tokens as illustrated by recent federal authority.”

To prove its point, the lawsuit directly refers to the SEC v. LBRY case. It urges the court to order an accounting of all New Yorkers who have used the exchange and disgorgement of cash illegally received from New Yorkers, as well as a permanent injunction against KuCoin "selling and buying stocks and commodities to and from New Yorkers".

James has taken this as his "eighth measure to rein in mysterious cryptocurrency services," as she claimed.

Great! You’ve successfully signed up.
Welcome back! You've successfully signed in.
You've successfully subscribed to Coin Aquarium.
Your link has expired.
Success! Check your email for magic link to sign-in.
Success! Your billing info has been updated.
Your billing was not updated.