Crypto exchange KuCoin reportedly settles lawsuit that labeled ETH as security
- Kucoin settles its case with NYAG and will be existing from New York state as part of the deal
- The lawsuit was the first regulatory action labelling Ethereum (ETH) as a security
The case of New York Attorney General – Letitia James versus Kucoin has reportedly come to an end. According to Reuters, the crypto exchange has decided to settle the lawsuit brought against it by the NYAG, instead of confronting it. The settlement will cost the platform a whopping $22 million along with an exit from the state.
The NYAG had sued the exchange in March of this year for operating in the state without registering as a security and commodities broker-dealer. The Attorney General’s office also alleged that the exchange had falsely represented itself. Moreover, the lawsuit aimed to stop the exchange from operating in New York and block users from accessing the website till it complies with the law.
Kucoin lawsuit claimed ETH to be a security
Interestingly, the lawsuit also alleged that popular cryptocurrencies like Ethereum (ETH), LUNA, and TerraUSD (UST) were securities and commodities. This was the first big profile lawsuit that claimed Ethereum (ETH) to be a security, which was previously argued to be a commodity by most regulators. A press release on the lawsuit read,
“This action is one of the first times a regulator is claiming in court that ETH, one of the largest cryptocurrencies available, is a security. The petition argues that ETH, just like LUNA and UST, is a speculative asset that relies on the efforts of third-party developers”
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In a statement with Reuters, AG Letitia James stated that “Crypto companies should understand that they must play by the same rules as other financial institutions”. Although an official statement on the settlement is yet to be made by either of the parties.
While this case seems to have to an end, US regulators’ faceoff against crypto companies is far from over. Just weeks before this case, US regulators settled a lawsuit against the world’s largest crypto exchange – Binance and its founder – Changpeng Zhao.
Notably, the case against Zhao is yet to come to completion due to pending sentencing. The founder faces at least 18 months in prison over money laundering violations. Meanwhile, Binance still has a pending case with the US Securities and Exchanges Commission (SEC).
Moreover, the NYAG itself has pending cases against crypto exchange – Gemini, bankrupt crypto lender – Genesis Global, and its parent company – Digital Currency Group (DCG). The Attorney General’s office has alleged all three parties of defrauding investors of over $1 billion, which has been refuted.