• The New York Attorney General (NYAG) Letitia James has claimed that Ethereum (ETH) is a security and exchanges should register it before offering it for trading.
• KuCoin is being accused of falsely representing itself as an exchange, and trading non-registered securities.
• The AG seeks to stop KUCoin from operating in New York until it complies with the law.
New York AG Claims Ethereum is Security
The New York Attorney General (NYAG) Letitia James recently filed a lawsuit against the crypto exchange KuCoin for allowing investors to buy and sell ETH without registering with the state. She stated that ETH is a security, just like TerraUSD (UST) and LUNA, since it is a, “speculative asset that relies on efforts of third-party developers to provide profit to ETH holders.”
KuCoin Accused of False Representation
The AG also charged KuCoin with falsely representing itself as an exchange, and trading non-registered securities. They are seeking to shut down its website until it complies with the law in what she termed as efforts to regulate the cryptocurrency industry.
Cryptocurrency Exchanges Need Registering
New York laws state that securities and commodities brokers must register with the state. KUCoin allegedly failed to do this, meaning they were not registered with the Securities and Exchange Commission (SEC) or recognized by the Commodity Futures Trading Commission. This would have allowed them to legally offer their services in New York State.
KuCoin Offers Multiple Cryptocurrencies
KuCoin allows investors to buy and sell cryptocurrencies, including ETH, TerraUSD (UST), and LUNA which are all considered securities according to NYAG’s claim. Furthermore, since ethereum transitioned to the proof-of-stake consensus system, ownership of ETH translates directly into potential profits by earning staking rewards when users lock their ETH into keep the network running.
In conclusion, NYAG Letitia James has filed suit against Kucoin for failure to comply with new york laws by registering as a broker dealer while offering unregistered securities such as Ethereum(ETH). Furthermore she claims that Ethereum can be classified as a security due its ability to generate profits through staking rewards when locked into its proof of stake consensus mechanism