New York State Attorney General Letitia James filed a lawsuit against crypto exchange Kucoin on Thursday for “failing to register as a securities and commodities broker-dealer and falsely representing itself as an exchange.”

See related article: CFTC chair calls Ethereum a commodity, in contrast to SEC chair Gensler’s position

Fast facts

  • In an email to Forkast, KuCoin’s legal team said: “At present, KuCoin has yet to receive any legal documents regarding this incident. KuCoin will continue to closely monitor the situation and will be addressing this matter through legal means if needed.” 
  • The Seychelles-based exchange allows users to buy and sell cryptocurrencies like Bitcoin and Ethereum worldwide, including from New York IP addresses. CoinMarketCap lists KuCoin as the world’s 4th top cryptocurrency exchange based on traffic, liquidity and trading volumes. 
  • James said that Terra-Luna, TerraUSD (UST) and Ether – the world’s second-largest cryptocurrency – are securities and should have been registered as such, before being traded by KuCoin. 
  • While James’ office called the suit the first time that Ether has been labeled a security by a U.S. attorney general in court, other U.S. regulators have been in a growing public dispute regarding the matter. 
  • On Wednesday, Chairman of the Commodities and Futures Trading Commission Rostin Behnam called Ethereum a commodity and not a security, in apparent contrast to U.S. Securities and Exchange Commission Chairman Gary Gensler who has made arguments similar to the New York attorney general. 
  • James is seeking a court order that stops KuCoin from labeling itself as an exchange, bars the company’s operations in New York, and directs KuCoin to implement geo-blocking based on IP addresses and GPS location to prevent access to New York investors.

See related article: Be careful what you wish for? Regulators pick up pace in the crypto industry crackdown