KuCoin crypto exchange has reached a $22 million settlement to resolve a lawsuit filed by the state of New York against it.
The settlement also includes KuCoin ceasing its trading activities in New York, indicating a significant agreement to address legal concerns.
According to the terms of the agreement, KuCoin will refund a total of $16.7 million to approximately 177,800 New York investors. In addition, the cryptocurrency exchange will pay a $5.3 million fine to the state.
The resolution was announced by New York Attorney General (NYAG) Letitia James, who cited KuCoin’s alleged misrepresentation as a crypto exchange while failing to register as a securities and commodities broker-dealer.
The lawsuit against KuCoin stems from allegations that the exchange misrepresented itself as a cryptocurrency platform while failing to comply with required registrations.
NYAG Letitia James emphasized the potential risks posed by unregistered offshore crypto platforms, pledging to take action against companies endangering New Yorkers’ savings and investments.
KuCoin, based in the Seychelles, operates a website and app that facilitates the trading of digital assets. However, the exchange was found to violate state law because it lacked legitimate registration with the Securities and Exchange Commission (SEC) and proper designation by the Commodity Futures Trading Commission (CFTC).
The legal action against KuCoin is consistent with similar regulatory pursuits by New York Attorney General Letitia James, including a case against CoinEx.
Previous settlements, such as the $24 million deal with Nexo Inc. and Nexo Capital Inc., have raised concerns about how regulators classify certain crypto assets as securities, resulting in ongoing policy debates and legal battles.
New York regulators’ actions go beyond KuCoin, with legal actions against other crypto entities and individuals.
A lawsuit against Alex Mashinsky, former CEO of Celsius Network, and a $1 million settlement with BlockFi Lending LLC for offering unregistered securities are two notable cases.
The exchange must take steps to prevent New York residents from accessing its platform as part of the settlement with KuCoin.
Furthermore, as stipulated by NYAG Letitia James, KuCoin is required to cooperate with US law enforcement by promptly responding to information requests and freezing assets when necessary.
