Enforcement Actions Against Cryptocurrency Companies
The New York state judicial authority announced on the 9th that it has sued cryptocurrency exchange KuCoin for conducting business in the state without being registered.
It was pointed out that KuCoin provided investors with a service that allowed them to buy and sell popular securities and commodities such as Ethereum (ETH), LUNA, and TerraUSD. After this explanation, it claims that “Ethereum is a security.” It asked KuCoin to cease operations in the state of New York and block access to its website from that state until it complies with the law.
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Law enforcement officials also argued that, in addition to trading, the company’s lending and staking services amounted to the sale of unregistered securities. New York law points out that any business dealing in securities or commodities must first register with the state.
What is staking
A system or service that rewards you by depositing a certain amount of virtual currency for a specified period of time.
Furthermore, although KuCoin claims to be an exchange, it is also problematic that it is not registered with the US Securities and Exchange Commission (SEC) or the US Commodity Futures Trading Commission (CFTC). Other countries, including Canada, the Netherlands and the Republic of the Seychelles, have already been found to operate without proper authorization, he said.
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Attorney General Letitia James said in a press release:
We are ignoring the law and enforcing regulatory action against cryptocurrency companies that pose a risk to investors, one by one.
All New Yorkers and businesses are required to comply with state laws and regulations, and KuCoin did not follow the rule of pre-registering a business.
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Grounds for being securities
Only the three cryptocurrencies mentioned above were specifically named in the press release. And it explains as follows.
Like LUNA and TerraUSD, Ethereum’s profits are dependent on the efforts of third-party developers.
This time, the law enforcement agency actually created an account on KuCoin with an IP address in New York State. He pointed out that he was trying to use services such as trading and lending, and that KuCoin had collected a fee at that time.
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The KuCoin lawsuit is said to be James’ eighth regulatory enforcement case against a cryptocurrency platform.
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