KuCoin and Ethereum have targets behind their backs – Just like the Securities and Exchange Commission (SEC), the New York Attorney General, Letitia JamesEast known to be very hostile to cryptocurrencies. His latest attack on the sector concerns the crypto-exchange KuCoin. The latter is accused of having sold securities (securities) – of which allegedly Ethereum – and goods (commodities) without registration prior to US regulators.
The hunt for unregistered crypto exchanges begins with KuCoin
Since it was launched in September 2017, the cryptocurrency exchange platform KuCoin had some legal concerns. Even recently, in December 2022, it is the central bank of the netherlands who criticized the crypto-stock exchange of Johnny Lyu (its CEO).
This March 9, 2023, it is therefore from the office of the New York Attorney General (NYAG) that KuCoin’s troubles come. The prosecutor Letitia James intends thus a lawsuit against KuCoin for having “failed to register” as a broker in securities and commodities.
“One by one, my office is taking action against cryptocurrency companies that brazenly ignore our laws and put investors at risk. (…) Today’s action is the latest in our efforts to rein in shadow (sic) crypto-companies and bring order to the industry. (…) KuCoin operated in New York without registration. That’s why we’re taking strong action to hold them accountable and protect investors. »
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Ethereum (ETH): a security upgraded to the same level as LUNA and UST
In addition to the direct attack against KuCoin, who is in the top 5 exchanges by volume of exchange, a sneaky amalgam is made against the blockchain Ethereum. Indeed, further in the NYAG press release, we discover that the most important and used crypto networks with smart contracts East assimilated with the resounding disasters of Terra (LUNA) and its stablecoin UST.
Worse still, theEther is considered there as a security (security). This classification would lead to dramatic consequences if it were to be decided in court, for the entirety of the crypto sector – except Bitcoin (BTC) and the stablecoins.
“(…) ETH, LUNA, and TerraUSD (UST) are securities and commodities. This action is one of the first times a regulator has claimed in court that ETH, one of the largest cryptocurrencies available, is a security (security). The petition argues that ETH, like LUNA and UST, is a speculative asset that relies on the efforts of third-party developers in order to provide profits to ETH holders. For this reason, KuCoin was required to register before selling ETH, LUNA or UST. »
NYAG press release
Let’s hope that prosecutor James goes a little too fast in its designation of ethers as a security on KuCoin. Indeed, after more than two years fierce legal battles, the SEC has, for example, still not been able to demonstrate that the XRP of Ripple is a security.
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