New York’s Stand Against KuCoin

New York’s Stand Against KuCoin

15-03-2023
                                    
Agencies |.- The New York Attorney General just filed charges against KuCoin for violating the securities and commodities laws of New York.

Letitia James, the attorney general of the state of New York, claims that Ethereum (ETH) is, in fact, a security and not just a commodity. KuCoin, which isn’t registered as a securities and commodities broker-dealer, has been operating in New York illegally, Letitia James alleges. Where does that leave the future of crypto in one of the largest states of America?

Well, to understand what just happened, let’s understand KuCoin and what exactly they did wrong do to come under heavy fire.

KuCoin is a crypto exchange platform based out of Seychelles in East Africa. The cryptocurrency exchange allows users to buy cryptocurrencies like Bitcoin and Ethereum, among others, from anywhere in the globe. Sounds like any other crypto exchange platform, right? KuCoin takes pride in calling itself one of the most secure crypto exchange platforms in the world, even though it took a hit of $150M in a hack in 2020. Before that KuCoin actually claimed, in their words, that it was the most secure and most advanced crypto exchange. That kind of backfired, didn’t it? Well, that’s KuCoin, but you might be wondering, what exactly is the lawsuit based on? Isn’t any crypto exchange in the market vulnerable to this exact same lawsuit? Let’s take a deeper look into what New York’s attorney general Letitia James is claiming.

The lawsuit claims that Ethereum, one of the most famous and valuable cryptocurrencies on the market, is, in fact, a security. The lawsuit goes on to argue the fact that users can actually earn substantial profit by holding the cryptocurrency, which by definition makes it a security. Another argument presented by the attorney general of New York is that Ethereum is now a proof-of-stake blockchain as of 2022. This means that if a user is in possession of Ethereum, they stand to earn profit by holding it, i.e. staking rewards. The lawsuit’s starting to make sense, right?

Ethereum is a revolutionary cryptocurrency, and in 2022, it transitioned from its less efficient and less secure proof-of-work architecture to the proof-of-stake consensus mechanism. What this does, is allows users to earn profits by holding Ethereum. The more the user stakes, the more they stand to earn from the coin. This is why Letitia James is among the very first regulators to claim that ETH is much more than a commodity and actually a security based on this fact. But is it that cut and dry?

Fortunately, not everyone sees it that way. Rostin Behnam from the Commodity Futures Trading Commission has reported to the Senate Agriculture Committee that Ethereum is not a security but a commodity. Behnam also states that if they had a strong reason to believe that Ethereum is a security, the crypto coin would have been listed as a security in the Commodity Futures Trading Commission exchange. The CFTC is not the only one who has a similar stance to this situation. The U.S. Securities and Exchange Commission (SEC) also considers Ethereum a commodity asset because of the fact that they’re completely decentralised, thus, making them a commodity asset and not a security.

But none of that changes the fact that the New York AG is backing down on the claims. This is because detectives working for the attorney general’s office have been conducting exchanges right there in New York on KuCoin for over a year. The Offices of the Attorney General (OAG) also claim that a subpoena was served to KuCoin back in January, but KuCoin not only refused to respond, but they failed to show up to testify. Thus, this lawsuit might actually be justified.

Of course, this isn’t the first stand against crypto exchanges that regulators have taken. A month ago, the SEC imposed a heavy fine of $30M on Kraken, an American exchange, for improperly staking their product, which came under a violation of the securities law. Similar violations of the securities and commodities laws were brought against CoinEx for allowing crypto trading of LUNA, AMP and LBC, which are, of course, considered securities by the OAG.

There’s no surprise that regulators are tightening up the laws and regulations based on crypto. With cryptocurrencies getting normalised every day, it stands to reason that regulatory bodies are imposing strict rules to control the decentralised way of life. What can you do to stay safe? Well, for one, always go with highly reputable, trusted and secure crypto trading platforms that you can rely on. Crypto-buying platforms like Voltcoins is among the most secure and trusted companies you can depend on! The premium crypto buying platform offers a diverse range of cryptocurrencies to buy from, including Bitcoin (BTC), Ethereum (ETC), LiteCoin (LTC), and Tether (USD). Voltcoins is offering an incredibly fast KYC process with hassle-free and secure transactions! With three different payment methods to pay for your crypto, including credit card payments, bank wire transfers, as well as Interac, Voltcoins is the perfect platform to buy crypto from.

| Agencies

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