NY AG is suing KuCoin for selling securities and commodities without registration

New York State Attorney General Letitia James announced that she has filed a lawsuit against cryptocurrency exchange KuCoin after being able to buy and sell crypto on the exchange, which is not registered in New York. “This action marks one of the first times a regulator has claimed in court that ETH, one of the largest cryptocurrencies available, is a security,” its office said in a statement.

The lawsuit, filed March 9 in New York County Superior Court, alleges that Seychelles-based company KuCoin violated securities laws when it “sells cryptocurrencies, which are commodities and securities, for sale offered, bought and offered for sale”. New Yorkers without being registered with the district attorney’s office.

In addition, KuCoin is said to have issued and sold its KuCoin Earn product, referred to in the complaint as a security, without registering as a securities broker or dealer. It is also claimed that KuCoin misrepresented itself as an exchange, since there was no registration for this function either.

Related: Dutch central bank says KuCoin is unlicensed and ‘offering services illegally’

The lawsuit states that “ETH, LUNA, and UST are commodities under both state and federal agency” under the state’s Martin Act, and KuCoin applied to register as a commodities broker. The lawsuit further states that “ETH, LUNA, UST and KuCoin Earn are each securities forest stone‘ – a test introduced by the New York Supreme Court of Albany County in 1936 – and under the Howey test. Aside from that:

“The Howey test is applicable to the tokens as shown by the recent federal agency.”

The lawsuit specifically cites the SEC v. LBRY case to support this claim. It is seeking a permanent injunction against KuCoin to “sell and buy securities and merchandise to and from New Yorkers.” In addition, it is asking the court to require accountability of all New Yorkers who used the exchange and confiscation of funds illegally obtained from New Yorkers.

According to them, this is James’ “eighth action to curb shady cryptocurrency platforms.”


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