KuCoin has reached an agreement with the New York Attorney General (NYAG) to halt all operations in the state. The agreement stems from a lawsuit filed by KuCoin alleging illegal and unregistered sales of securities and commodities.
KuCoin is required to pay over $22 million as part of the agreement, with over $16.7 million earmarked for refunds to New York-based users and an additional $5.3 million to the NYAG.
The lawsuit, filed in March, accused KuCoin of running a cryptocurrency exchange where users could buy and sell cryptocurrency classified as securities or commodities under New York State law.
The agreement recognizes KuCoin’s operation of a platform dealing with such tokens but stops short of explicitly labeling specific crypto, such as Ethereum (ETH), as securities.
Initially, the NYAG’s legal action against KuCoin was intended to establish Ethereum as a security. The lawsuit claimed that ETH, like other crypto such as LUNA and UST, relied on the efforts of third-party developers to generate profits for holders.
The settlement, however, did not include a specific admission from KuCoin about the security status of individual crypto.
Despite not meeting its initial goal, the NYAG emphasized the importance of holding crypto companies accountable for financial regulation compliance.
As part of the agreement, KuCoin has restricted access to its platform for users with New York IP addresses, affecting over 177,000 users in the state.
New York has maintained strict crypto regulations, as evidenced by the contentious BitLicense crypto registration laws passed in 2015.
KuCoin’s withdrawal from the state is similar to similar actions taken by crypto exchanges such as Kraken in response to regulatory constraints.
New York Attorney General Letitia James emphasized the importance of crypto companies following financial rules, pledging to hold them accountable for any violations.
KuCoin’s settlement reflects the ongoing difficulties that crypto exchanges face as they navigate regulatory landscapes, with compliance and legal issues affecting their operations.
