KuCoin Exchange Sued by NYAG, Claims Ethereum is a Security

Robin Moore

Operation ChokePoint 2.0 continues, as yet another exchange is having legal issues. News from a recent press release shows that New York Attorney General Letitia James filed a lawsuit against KuCoin exchange for, “failing to register as a securities and commodities broker-dealer and falsely representing itself as an exchange.”

The press release further states: “The OAG was able to buy and sell cryptocurrenties on KuCoin in New York even though the company is not registered in the state. The Attorney General James seeks to stop KuCoin from operating in New York and to block access to its website until it complies with the law.”


New York, KuCoin and Ethereum

Currently, Coinbase, Kraken, Bittrex, and Bitfinex are all registered with the state of New York. It is speculated that New York state does not want KuCoin registered with them because they are not compliant with BitLicense regulations, which are stricter regulations than other countries. The regulations are designed to protect the average consumer and prevent things like money laundering.

The petition today also notes that Ethereum, the second-largest crypto by market cap, is a security. The press release states:

“The petition argues that ETH, just like LUNA and UST, is a speculative asset that relies on efforts of third-party developers in order to provide profit to the holders of ETH. Because of that, KuCoin was required to register before selling ETH, LUNA, or UST.”

New York doesn’t stop there, also going after KuCoin Earn, which is an income generator for crypto enthusiasts by the lending and staking of tokens.

Ethereum is a security?

This is a bold statement, considering that this is the contention point within the Ripple/XRP case for the past two years. Per people close to the matter, a summary judgement is expected to come within the month for Ripple. XRP hodlers are awaiting the summary judgement, hoping that XRP may be the first cryptocurrency to get clarity within the United States.

In the meantime, it seems like the attack on the cryptocurrency realm is never-ending, with today’s lawsuit only showing that Operation ChokePoint 2.0 is in full effect.

Will the United States start making regulations on the level they have been prosecuting the industry within the last year? Only time will tell.