Crypto Exchange KuCoin in Hot Water for Sale of Unregistered Securities in New York

KuCoin crypto exchanges has found itself in hot water after being targeted by the New York State Attorney for engaging in unregistered activities. In a lawsuit filed by Attorney General Letitia James, KuCoin has been accused of selling and purchasing unregistered securities and commodities to users.

The legal action also classifies Ethereum, the second-largest cryptocurrency, as an unregistered security. This marks one of the first times a regulator has claimed in court that ETH is a security.

The Seychelles-based exchange has also been accused of issuing and selling its KuCoin Earn product, which the complaint labels a security, without registering as a securities broker or dealer.

These steps taken by regulators aim to bring some order and certainty to the crypto industry. New York Attorney General Letitia James said, “Today’s action is the latest in our efforts to rein in shadowy cryptocurrency companies and bring order to the industry. All New Yorkers and all companies operating in New York have to follow our state’s laws and regulations.”

US regulators have the power to sue crypto exchanges if they believe they have violated securities laws by selling securities and commodities without proper registration.

The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are responsible for trading securities and commodities in the US.

Any entity that wants to sell securities or commodities must register with the appropriate regulatory body and follow specific rules and regulations. Failure to do so can result in legal action by the regulatory authorities.

Crypto exchanges that offer trading in securities or commodities may be subject to these rules and regulations, depending on the specific nature of the traded assets.

The SEC and the CFTC have become more active in regulating the crypto industry in recent years. They have issued warnings and taken legal action against companies and individuals they believe have violated securities laws or engaged in fraudulent behavior.