New York Attorney General Files Lawsuit Against Kucoin and Declares Ethereum a Security
On March 9, 2023, New York attorney general Letitia James announced that her office had once again cracked down on crypto platforms by filing a lawsuit against the Seychelles-based crypto exchange Kucoin. Members of the Office of the Attorney General (OAG) were able to purchase crypto assets, despite the exchange not being registered in the state. In addition to the lawsuit, James and the OAG insist that the second-largest crypto asset by market capitalization, ethereum, is a security. Why Ethereum Is Considered a Security According to New York’s OAG
Two weeks ago, New York attorney general Letitia James and the Office of the Attorney General (OAG) filed a lawsuit against Coinex. On Thursday, the OAG filed a lawsuit against the crypto trading platform Kucoin. The charges against Kucoin include failing to register as a securities and commodities broker-dealer and falsely representing itself as an exchange. James detailed that through the action, she hopes to ban Kucoin from operating in New York and said it was her latest enforcement action to “rein in cryptocurrency platforms.” Ethereum chart by TradingView
The lawsuit also details that the crypto assets ethereum (ETH), terra (LUNA), and terrausd (UST) are securities. “The petition argues that ETH, just like LUNA and UST, is a speculative asset that relies on the efforts of third-party developers in order to provide profit to the holders of ETH,” the complaint’s press release details on Thursday. Because the state of New York’s OAG believes these crypto assets are securities, Kucoin failed to register as a licensed broker in the state. The lawsuit itself explains why it defines ethereum (ETH) as a security, as it states:
[Ethereum] is promoted as an investment. The developers of [Ethereum] promoted it as an investment that was contingent on the growth of the Ethereum network. For instance, the Ethereum Foundation notes on its website that many [Ethereum] users ‘see it as an investment, similar to Bitcoin and other cryptocurrencies.’ In addition, the ICO Documents included representations that [ethereum] production would dramatically slow over time, resulting in [ethereum] becoming increasingly scarce and, thus, more valuable.
While the news of Kucoin being sued by James and the OAG is interesting, the crypto community has been focused on the fact that the New York Attorney General is calling ethereum (ETH) a security. After James’ press release and the court filing were published, the topic of whether or not ethereum is a security has become a topical conversation on social media and crypto forums.
The crypto economy is down following the news, now under the $1 trillion range, down 6.74% to $942 billion. Bitcoin (BTC) lost 7.76% in the past 24 hours, and ethereum (ETH) has shed 7.54% against the U.S. dollar. Tags in this story Bitcoin, broker-dealer, Coinex, commodities, crypto assets, crypto exchange, crypto forums, crypto platforms, Cryptocurrency, Developers, enforcement action, Ethereum, ethereum security, Exchange, ICO, Impact, investment, KuCoin, Lawsuit, Letitia James, Market Capitalization, New York Attorney General, OAG, registered, Regulation, Securities, Seychelles, Social Media, State, U.S. dollar
Do you think the New York attorney general’s actions will have a significant impact on the regulation of cryptocurrency platforms, and do you agree with the declaration of ethereum as a security? Share your thoughts about this subject in the comments section below. Jamie Redman
Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today. US Accounting Watchdog Issues Warning on Crypto Proof-of-Reserve Audits: Investors Urged to Exercise Caution NEWS | 2 hours ago Elizabeth Warren Blames ‘Crypto Risk’ for Silvergate Bank"s Liquidation, Critics Dismiss Senator’s Claims as ‘Terribly Misinformed’ NEWS | 6 hours ago
Image Credits: Shutterstock, Pixabay, Wiki Commons Previous articleUS Accounting Watchdog Issues Warning on Crypto Proof-of-Reserve Audits: Investors Urged to Exercise Caution Next articleDigital Real Pilot to Run on Ethereum-Compatible, Permissioned Blockchain Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article. Read disclaimerShow comments More Popular NewsIn Case You Missed ItRipple CEO: SEC Lawsuit Over XRP "Has Gone Exceedingly Well"
The CEO of Ripple Labs says that the lawsuit brought by the U.S. Securities and Exchange Commission (SEC) against him and his company over XRP "has gone exceedingly well." He stressed: "This case is important, not just for Ripple, it’s ... read more.Draft Law Regulating Aspects of Crypto Taxation Submitted to Russian Parliament Fidelity Investments Launches Crypto, Metaverse ETFs — Says "We Continue to See Demand" Argentinian Securities Regulator Launches Innovation Hub to Discuss Regulated Crypto Investments FBI Issues Alert Concerning Malicious State-Sponsored North Korean Hackers Targeting Crypto Firms