The New York AG labels Ethereum as a security in a lawsuit against KuCoin

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Key takeaways :

  • Letitia James, the attorney general of New York State, is suing KuCoin on the grounds of KuCoin being an unlicensed broker or dealer in commodities and securities.
  • Ether is included as an unregistered security in the lawsuit as well.

The KuCoin cryptocurrency exchange is being sued by the New York Attorney General’s office for purportedly breaking state securities and commodities laws.

In a lawsuit against cryptocurrency exchange KuCoin, New York Attorney General Letitia James became the first government official in the US to assert in court that ethereum is a security.

James said in the lawsuit that Seychelles-based KuCoin has been conducting business in New York without being authorised to act as a broker-dealer in securities and commodities.

James explained that One by one, my office is actively working against cryptocurrency companies that are flagrantly flouting our rules and endangering investors.

On several fronts, and as the matter of settlement negotiations, the issue of which cryptoassets regulators deem securities—and as such, subject to prevailing regulations and laws and the SEC’s jurisdiction—is being questioned.

Many regulators around the World are looking out to set clear standards for digital assets that qualify as securities.

As per the financial watchdog in Belgium, cryptocurrencies like bitcoin and ether cannot be categorised as securities or investment instruments.

Similar claims have been made by SEC officials. Both bitcoin and ETH are not securities, according to William Hinman, the former Director of Corporate Finance at the SEC, who stated this in a speech in 2018. He argued that ETH was not a security because it had become “sufficiently decentralised” over the previous four years, despite its initial coin offering in 2014. He used the “decentralised” nature of bitcoin as evidence.

According to the petition, ETH, like LUNA and UST, is a “speculative asset” that  depends on the work of outside developers to generate profits for its owner.

The crypto exchange is also accused by the NYAG of breaking securities laws by operating the lending and staking service Kucoin Earn. The lawsuit also claims that Kucoin did not register with the CFTC and SEC. Furthermore, despite the OAG’s subpoena, the exchange refused to provide information on its operations in the state.

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Aadrika Sharma
Aadrika Sharma

I enjoy writing and try to learn new things every passing day!

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