Key takeaways:
- KuCoin will pay $22 million and end access for users in New York as part of a settlement.
- KuCoin is set to reimburse New York customers with $16.77 million and pay an additional $5.3 million to the State of New York’s Attorney General.
In a recent development, cryptocurrency exchange KuCoin has agreed to pay $22 million to settle a lawsuit filed by the New York Attorney General (NYAG) earlier this year. According to a Reuters report, the Seychelles-based exchange faced allegations of operating in the state without proper registration, prompting the legal action led by Letitia James.
The NYAG, Letitia James, accused KuCoin of failing to register before facilitating cryptocurrency transactions on its platform, stating, “Crypto companies should understand that they must play by the same rules as other financial institutions, and my office will hold them accountable when they don’t.”
As part of the settlement, KuCoin admitted to operating a cryptocurrency trading platform where users, including those in New York, could buy and sell cryptocurrencies classified as securities or commodities under New York state laws.
The exchange also acknowledged representing itself as an ‘exchange’ without being registered as such in accordance with New York State laws.
To remedy the situation, KuCoin is obligated to provide full refunds amounting to $16,766,642 to 177,800 investors in New York.
Eligible investors can withdraw their assets directly from KuCoin within the next 90 days, Access to withdrawals will be restricted within 30 days
.After which a claims process will be initiated for those who haven’t received their refunds. Investors seeking more information or filing a claim can contact [email protected].
KuCoin CEO Johnny Lyu confirmed the settlement and announced the company’s decision to exit the New York market.
Lyu assured impacted users, particularly those based in New York, that they would receive notifications through email or text within the next ten days regarding the developments. He emphasized the importance of relying on official communication from KuCoin to avoid potential misinformation.
As part of the exit strategy, KuCoin will close the accounts of all New York residents within 120 days and prevent them from creating new accounts in the future.
This settlement comes at a time when New York is actively shaping its crypto regulatory landscape.
Last month, the New York Department of Financial Services released guidance aimed at strengthening the procedures for listing or delisting digital assets by financial firms. KuCoin’s case underscores the growing scrutiny and insistence on compliance within the cryptocurrency industry, particularly in major financial hubs like New York.
