KuCoin, the Seychelles-based crypto exchange, has agreed to cease all operations in New York and pay over $22 million to settle a lawsuit with the New York Attorney General over the illegally unregistered sale of securities and commodities.
The company is now reportedly required to pay New York-based KuCoin users over $16.7 million worth of refunds for crypto transactions, and will owe a further $5.3 million to the Office of the Attorney General, according to legal filings.
KuCoin has also admitted, per the settlement, that it operates a crypto exchange on which users can purchase or sell cryptocurrencies which “are securities or commodities as defined under the laws of New York State.”
While a substantial admission, that language falls short of the New York Attorney General’s initial aim when it filed its lawsuit against KuCoin in March. At that time, the NYAG sought to use its case against the exchange to simultaneously demonstrate that Ethereum is a security under New York law—a bold accusation.
My office is making crypto platform @kucoincom pay over $22 million for illegally operating in New York.
KuCoin is also banned from doing business in our state.
Shady cryptocurrency platforms must play by the same set of rules as everyone else or face the consequences. https://t.co/v3sS3eP3XJ
— NY AG James (@NewYorkStateAG) December 12, 2023
“This action is one of the first times a regulator is claiming in court that ETH, one of the largest cryptocurrencies available, is a security,” the NYAG proclaimed in March. “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.”
Tuesday’s settlement, however, did not see KuCoin admit that any particular cryptocurrency it offered was a security—only that some of the tokens it bought and sold were either securities or commodities.
Regardless, the concessions made by KuCoin to end the suit are substantial. As of this writing, internet users with New York IP addresses can no longer access KuCoin’s platform. The service had over 177,000 users in the state, according to the NYAG.
“Crypto companies should understand that they must play by the same rules as other financial institutions, and my office will hold them accountable when they don’t,” New York Attorney General Letitia James said in a statement. “I will continue to take action against any company that brazenly disregards the law and jeopardizes New Yorkers’ savings and investments.”
New York has, for years, boasted one of the most restrictive crypto policies in the United States. As early as 2015, crypto exchange Kraken, among others, left the state in protest of new BitLicense crypto registration laws, which Kraken decried as “abominable,” “cruel,” and “nasty.”
In October, California passed a similar crypto regulation law, which will go into effect in July 2025.
Edited by Andrew Hayward
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Source: https://decrypt.co/209479/kucoin-leaving-new-york-after-22-million-nyag-settlement-wont-call-ethereum-security
