New York State Attorney General Letitia James took another crackdown on cryptocurrency platforms and filed a lawsuit against KuCoin , accusing the Seychelles-based cryptocurrency exchange of violating securities laws by offering securities that meet the definition of securities without registering with New York authorities. Cryptocurrencies, including Ethereum.
According to the lawsuit filed Thursday in New York state court, KuCoin is not registered as a securities and commodities broker-dealer in New York, but falsely represents itself as an exchange, allowing New York residents to register accounts and buy and sell cryptocurrencies on the platform. In addition, the New York State Attorney General’s Office also accused KuCoin of selling unregistered securities through its lending and pledge product KuCoin Earn.
Letitia James stated that through this enforcement action, he hopes to seek a court order to prevent KuCoin from operating in New York State, and instruct KuCoin to implement geo-blocking of IP addresses and GPS locations to prevent New York State residents from accessing KuCoin’s applications and services .
New York State Attorney General: Ether is a Security
In this lawsuit, the New York State Attorney General’s Office also declared in court for the first time that “Ether is a security.” While Securities and Exchange Commission (SEC) Chairman Gary Gensler has hinted that “Ether could be considered a security,” at the same time, the Commodity Futures Trading Commission (CFTC) has long asserted that “Bitcoin, Ether are commodity assets.”
“Like LUNA, UST, Ether is a speculative asset that relies on the efforts of third-party developers in order to provide profits to Ether holders,” Letitia James said in a March 9 statement.
The complaint also mentions that after Ethereum switched to the proof-of-stake (PoS) consensus mechanism last year, it allows users to earn rewards by staking Ether in anticipation of making a profit, which also makes Ether a security.
Ether fell 8% in just half an hour after the lawsuit came to light, while the broader cryptocurrency market saw similar losses.
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