KuCoin, one of the largest cryptocurrency exchanges, has been hit by a lawsuit from the New York Attorney General.
On Thursday, Letitia James, the Attorney General of New York State, initiated a lawsuit against one of the largest cryptocurrency exchanges KuCoin.
The Seychelles-based crypto exchange has violated securities laws by providing tokens, such as Ether and many more, that match the definition of security without the submitting a letter to OAG, also known as the New York State Department of Law.
The lawsuit presented in the court read: “KuCoin failed to register with OAG as a securities broker, dealer or commodity broker-dealer as required by Article 23-A of New York General Business Law (“GBL”)”
“KuCoin further violated the law by representing that it is an “exchange” without satisfying the substantial prerequisites required by GBL,” the document further reads.
It is the first allegation ever that regulators are considering Ether as a security. However, Gary Gensler, the chair of the Securities and Exchange Commission (SEC), favors Ether as a security.
On the other hand, Rostin Benham, chairman of the Commodity Futures Trading Commission (CFTC), the SEC’s sister regulatory agency, elaborated that bitcoin and Ether fall under commodities.
As per the lawsuit, James alleges that Ether is a security under the Martin Act (a 102-year-old New York States anti-Fraud law) since its price depends on the endeavors of others, especially Vitalik Buterin, who is the co-founder of the second largest cryptocurrency ‘Ethereum.’
Following ahead, the New York Attorney General believes altcoins like ETH, the LUNA token, and TerraUSD (USDT) stablecoin are securities that are all traded on the KuCoin exchange.
The border cryptocurrency market is under selling pressure, and Ethereum dropped nearly 8.3% after the reveal of this suit.
Amid a press release, the NYAG’s Letitia stated, “The Petition argues that ETH, just like LUNA and UST, is a Speculative asset that relies on the efforts of third-party developers to provide profit to the holders of ETH.” Because of that, “KuCoin was required to register before selling ETH, LUNA, or USD.”
Additionally, Letitia James claimed that the crypto exchange “KuCoin” offers unregistered securities through KuCoin Earn, the exchange’s lending and staking program.
However, the KuCoin exchange is yet to respond to the NYAG’s office lawsuit against it.
