KuCoin hit with lawsuit from New York Attorney General
![](https://www.cityam.com/wp-content/uploads/2023/03/KuCoin.jpg?w=493)
New York Attorney General Letitia James has filed a lawsuit against KuCoin for “failing to register as a securities and commodities broker-dealer and falsely registering itself as an exchange”.
The Office of the Attorney General (OAG) says it was able to buy and sell cryptocurrencies on KuCoin in New York, even though the company is not registered in the state.
In the filing, Letitia James said her office was seeking to stop KuCoin from operating in New York and to block access to its website until it complies with the law.
“One by one my office is taking action against cryptocurrency companies that are brazenly disregarding our laws and putting investors at risk,” said Attorney General James.
“Today’s action is the latest in our efforts to rein in shadowy cryptocurrency companies and bring order to the industry. All New Yorkers and all companies operating in New York have to follow our state’s laws and regulations. KuCoin operated in New York without registration and that is why we are taking strong action to hold them accountable and protect investors.”
KuCoin is a cryptocurrency trading platform that allows investors to buy and sell digital assets through its website and app.
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 in order to provide profit to the holders of ETH. Because of that, says the Attorney General, KuCoin was required to register before selling ETH, LUNA, or UST.
New York legislation requires securities and commodities brokers to register with the state.
The OAG was able to create an account with KuCoin using a computer with a New York based IP address and buy and sell digital tokens, for which KuCoin charged a fee. The OAG was also able to deposit digital assets into the KuCoin Earn product, for which KuCoin also charged a fee.
Last month, Attorney General James brought action against CoinEx for similarly failing to register as a securities and commodities broker. In January, Attorney General James and a multistate coalition recovered $24 million from the cryptocurrency platform Nexo for operating illegally and sued the former CEO of Celsius for defrauding investors and concealing the company’s dire financial condition.
In June 2022, the Attorney General reached a nearly $1 million settlement with crypto platform BlockFi Lending LLC for offering unregistered securities.
The KuCoin case is being handled by Assistant Attorney General John Ruth of the Investor Protection Bureau, with assistance from Legal Assistants Charmaine Blake and Edward Jaffe, and Detective Investigator Brian Metz of the Investigations Division. The Investor Protection Bureau is led by Bureau Chief Shamiso Maswoswe and Deputy Bureau Chief Kenneth Haim and is a part of the Division for Economic Justice, which is overseen by Chief Deputy Attorney General Chris D’Angelo and First Deputy Attorney General Jennifer Levy.