• The New York District Attorney General, Letitia James, has filed a lawsuit against crypto exchange KuCoin for offering unregistered securities and commodities in the state.
• The lawsuit alleges that KuCoin facilitated access to financial products such as KuCoin Earn without registering with federal authorities.
• If Ethereum is classified as a security, its ecosystem and investors in the U.S. could suffer a blow from the lawsuit.
New York State Files Lawsuit Against Crypto Exchange KuCoin
The New York District Attorney General (NYDA), Letitia James, has filed a lawsuit against crypto exchange KuCoin for allegedly offering unregistered securities and commodities in the state of New York. PhoenixFin and Mek Global Limited were two companies running the trading venue in the U.S., which are now being targeted by the lawsuit.
Accusations Against KuCoin
The document accuses KuCoin of offering unregistered digital assets such as Terra’s former native token LUNA, its algorithmic stablecoin UST, and Ethereum (ETH). However, it does not provide details on which tokens fall under the security classification and which are commodities or if Ethereum falls under the jurisdiction of Securities and Exchange Commission (SEC).
KuCoin Allegedly Offered Unregistered Financial Products
In addition to allegedly offering unregistered assets in New York, KuCoin is accused of facilitating access to financial products such as its yield-bearing product KuCoin Earn without registering with federal authorities or regulators. According to Article 23-A of New York General Business Law (“GBL”) also known as Martin Act: “Such conduct is a fraudulent practice under the Martin Act.”
Purpose Of The Lawsuit
The purpose of this lawsuit is to ultimately ban KuCoin from operating in the U.S., while demanding a full report on any fees received from New Yorkers who used their services.
Potential Impact On Ethereum Ecosystem
If Ethereum is classified as a security by NYDA’s case against KuCoin, then its ecosystem and investors could take a major hit due to this litigation process.
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