Last Thursday, New York state attorney general Letitia James sued KuCoin. She declares that KuCoin, headquartered in Seychelles, broke the law by offering tokens like Ether that meet the description of securities without first registering with the attorney general’s office.
Letitia James Claims Ether is a Security in KuCoin Case
This is the first legal instance in which a regulator has argued that Ether is a security. SEC chairman Gary Gensler suggests that his organization may view Ether as a security. On the other hand, the SEC’s sister regulator, the Commodity Futures Trading Commission (CFTC), has been arguing for some time that Bitcoin and Ether are commodity assets.
Because the value of ether depends on the efforts of others, including co-founder Vitalik Buterin, James’ lawsuit claims that it qualifies as a security under the Martin Act, a 102-year-old New York anti-fraud law that grants the Attorney General the authority to investigate securities fraud and bring both civil and criminal actions against violators.
About Lawsuit
The lawsuit claims that ETH, LUNA token, and the UST stablecoin, all of which are traded on the exchange, are securities in the eyes of the NYAG’s office. In this direction, 30 minutes after the suit’s disclosure, the price of ETH was down 8%, and the overall cryptocurrency market also took a hit.
“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, KuCoin was required to register before selling ETH, LUNA, or UST.”
NYAG’s office
In spite of being served in person and by email with subpoenas, the exchange did not react. James went on to claim that KuCoin Earn, the lending and staking platform for the exchange, offers unregistered securities for sale. The Attorney General’s office was able to create the exchange account using a computer with a New York-based IP address to buy and sell digital tokens, for which the exchange charged a fee.
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