On Thursday, the attorney general of New York, Letitia James, filed a lawsuit against KuCoin, alleging that the cryptocurrency exchange is breaking the law by offering tokens, such as ether, in New York without registering.
According to the allegation, KuCoin, based in Seychelles, violated securities laws when it sold, offered to sell, purchased, and offered to purchase cryptocurrencies that are commodities and securities to people in New York without being registered with the attorney general’s office.
The lawsuit was filed on March 9, 2023, in the Supreme Court of the State of New York City.
KuCoin was charged with not registering as a securities broker or dealer when it issued and sold its KuCoin Earn product, which the complaint refers to as security. Additionally, the lawsuit claims that KuCoin misrepresented itself as an exchange without registering to perform that role.
It is the first legal issue in which a regulator has argued that ether is a security. Gary Gensler, the chairman of the Securities and Exchange Commission (SEC), has suggested that his organization might view ether as a security.
Meanwhile, the Commodities Futures Trading Commission (CFTC), the SEC’s sister regulatory body, has long held that both bitcoin and ether are commodity assets.
According to the lawsuit, the state’s Martin Act defines ETH, LUNA, and UST are commodities, and KuCoin applied to register as a commodities dealer.
They state that ETH, LUNA, UST, and KuCoin Earn are each security under Waldstein (a standard set by the Albany County branch of the New York Supreme Court in 1936) and under the Howey test.
Attorney General James is suing KuCoin to get a court order stopping the company from calling itself an exchange, forbidding it from operating in New York, and ordering KuCoin to implement geo-blocking based on GPS locations and IP addresses to block access to KuCoin’s apps and services from New York.
Keep on reading to get some details regarding KuCoin and its features.
What Does The Alleged Business KuCoin Does Actually?
KuCoin, a prominent cryptocurrency exchange founded in 2017, allows users to buy, sell, and trade cryptocurrencies. The platform enables margin, futures, and peer-to-peer trading in addition to standard trading choices.
Users can lend or stake their cryptocurrency to receive additional rewards. KuCoin has affordable trading fees comparatively, making it a desirable option.
This cryptocurrency exchange offers more than 700 cryptocurrencies for users to buy, set, and trade. The significant cryptocurrencies offered by KuCoin include Bitcoin, Dogecoin, Ethereum, Shiba Inu, and XRP.
The Seychelles-based KuCoin cryptocurrency exchange was founded in 2017. Now, it has more than 20 million users and a presence in more than 200 countries. Since its founding, it has developed into one of the largest global exchanges by trade volume.
KuCoin Operations In The United States
Even though KuCoin has many users worldwide, it is not licensed in the United States. So the US-based users of cryptocurrency exchanges can use any other such platform licensed in their nation.
Although customers from the United States can register for a KuCoin account, their access to some functions is restricted since KuCoin has no American operating license. Considering this, opening an account could come with certain issues.
For instance, you might not be able to withdraw your holdings if US regulators decide to crack down on KuCoin. The exchange has also run into regulatory problems in nations like Canada and the Netherlands.
The operation of KuCoin without the proper license from the authorities of the US is the reason why it had to face the lawsuit filed by Letitia James in March 2023.
It is not legal to function in a country without the appropriate license and other basics suggested by the county.
Many users claimed that KuCoin had a large exposure to FTX when it collapsed in November 2022. Users were reassured by KuCoin CEO Johnny Lyu that the company had no exposure and was not associated in any way with FTX. in response to those incidents, KuCoin issued a Proof of Reserves to increase user confidence.
How Are People Rating The KuCoin?
In comparison to other cryptocurrency exchanges, KuCoin has low costs and a broad range of coins.
KuCoin has several attractive features that impress users quickly. But this cryptocurrency platform has been criticized and accused of several negative reviews from customers.
KuCoin customers give it low ratings. Several customers claim that the KuCoin has problems with customer service, withdrawal procedures, and depositing are mentioned in various unfavorable reviews. Some blame the business for market manipulation and claim their asset has gone missing from their accounts, which is very concerning.
Despite the negative reviews and opinions of KuCoin users, a few of its users did praise KuCoin for its low cost and broad range of coins compared to other cryptocurrency exchanges.
Before investing in crypto platforms like KuCoin, ensure the business is licensed in your country and goes through its terms and conditions to avoid scams.