The New York Attorney General, Letitia James, has filed a lawsuit against KuCoin exchange for failing to register as a securities and commodities broker-dealer and misrepresenting itself as an exchange. In a press release, it was revealed that the OAG was able to trade cryptocurrencies on KuCoin in New York, despite the company not being registered in the state. Attorney General James seeks to prevent KuCoin from operating in New York and block access to its website until it complies with the law.
Operation ChokePoint 2.0 Continues
The lawsuit against KuCoin is the latest in a series of legal actions against cryptocurrency companies under Operation ChokePoint 2.0, which seeks to crackdown on money laundering and protect consumers. Coinbase, Kraken, Bittrex, and Bitfinex are all registered with the state of New York, but KuCoin’s failure to comply with BitLicense regulations has prevented its registration.
Also Read: New York Attorney General Sues CoinEx Over Fraudulent Practices
KuCoin Earn Also Under Fire
The lawsuit also targets KuCoin Earn, which allows users to generate income through the lending and staking of tokens. The New York Attorney General argues that Ethereum, the second-largest cryptocurrency by market cap, is a security, and that KuCoin was required to register before selling ETH, LUNA, or UST. This is a bold statement, as the classification of Ethereum as a security has been a contentious issue in the Ripple/XRP case for the past two years.
The lawsuit against KuCoin highlights the ongoing regulatory challenges facing the cryptocurrency industry in the United States. Ripple/XRP holders are awaiting a summary judgement in the case, which could provide much-needed clarity on the classification of cryptocurrencies as securities. It remains to be seen whether the United States will introduce regulations that match the level of scrutiny and enforcement seen in recent legal actions against the industry.
