NY Attorney General sues KuCoin for securities violation

The New York Attorney General has filed a lawsuit against crypto exchange KuCoin, for allegedly offering to buy and sell unregistered commodities and securities even though it’s not registered in New York.

According to an NYAG office press release, ETH, which KuCoin offers for sale and purchase, was recognized as a security for the first time, along with LUNA and UST:

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.

NY AG Letitia James filed a complaint in the Supreme Court of the State of New York County on March 9 after she managed to sell and purchase crypto on the exchange. According to the lawsuit, Seychelles-based KuCoin violated securities law when it “sold, offered to sell, purchased and offered to purchase cryptocurrencies that are commodities and securities” to New Yorkers without previously registering with the attorney general’s office.

KuCoin is also alleged to have issued and sold its product called KuCoin Earn, which is described as security, without obtaining the required registration as a securities broker or dealer. In addition, the complaint alleges that KuCoin misrepresented itself as an exchange because it didn’t have the necessary registration for that function either.

According to CoinDesk, KuCoin did not respond to subpoenas filed by the NYAG’s office, served via email and in person.

Attorney General James has filed a lawsuit seeking an injunction prohibiting KuCoin from presenting itself as an exchange, shutting down operations in New York, and requiring KuCoin to implement geoblocking measures based on IP addresses and GPS. These measures would prevent individuals in New York from accessing KuCoin’s apps and services.