New York Attorney General Letitia James today filed a lawsuit against cryptocurrency exchange KuCoin, alleging that the company did not register as a securities and commodities broker and falsely presents itself as an exchange.
KuCoin, which is ostensibly a cryptocurrency exchange, is alleged to allow users in New York to buy and sell cryptocurrency despite not being registered with the state to do so. Established in 2017, KuCoin is a legally registered exchange in the Seychelles and is based in Hong Kong, neither of which are remotely close to New York.
The lawsuit seeks to prevent KuCoin from "operating in New York," even if it doesn't, until it complies with New York law. The attorney general believes that any service that provides services to New York residents, regardless of their actual location, should register with the state.
โOne by one, my office is taking action against cryptocurrency companies that blatantly ignore our laws and put investors at risk,โ James said in a statement. statement. โToday's action is the latest in our efforts to rein in shadow cryptocurrency companies and bring order to the industry. All New Yorkers and all businesses doing business in New York must comply with the laws and regulations of our state. KuCoin operated in New York without registration and that is why we are taking strong action to hold them accountable and protect investors."
While many cryptocurrency exchanges could arguably be described as โdarkโ, KuCoin, at least on paper, is not. Shady and dubious cryptocurrency exchanges generally do not openly raise VC funds from American VC firms like IDG Capital LLC and Matrix Partners Inc., both of which participated in KuCoin. last round.
But the lawsuit looks even stranger, as James argues that KuCoin is also acting illegally by offering transactions on Ethereum, along with other tokens including LUNA and TerraUSD, which it claims are securities.
New York State's claim that ETH is a security would be news to the National Stock Market Commission and your presidentwho has repeatedly said that bitcoin and Ethereum are not securities.
James also claims that KuCoin sold unregistered securities in the form of KuCoin Earn, a lend-and-stake product. New York law requires brokers in securities and commodities to register with the state, which KuCoin did not.
The lawsuit seeks an injunction for KuCoin to stop presenting itself as an online exchange, which it is, to prevent the company from operating in New York, which it is not, and for KuCoin to implement geo-blocks based on IP addresses. and GPS Locations to prevent access to your services from New York. It's not necessarily a bad lawsuit, but it's easily avoided with a virtual private network.
