KuCoin, one of the largest crypto exchanges, is in trouble as it faces a lawsuit from the New York Attorney General’s office over the sale of unregistered securities and commodities to users.
The move comes as US regulators continue to crack down on crypto exchanges operating without proper registration with local authorities.
The legal document filed by the Attorney General’s office alleges that KuCoin sold and purchased unregistered securities and commodities to users.
Additionally, the lawsuit categorizes Ethereum as an unregistered security, which is a controversial move given that ETH is one of the largest cryptocurrencies available.
The lawsuit also states that KuCoin issued and sold its KuCoin Earn product, which the complaint labels as a security, without registering as a securities broker or dealer.
This is not the first time that US regulators have sued a crypto exchange for violating securities laws, with CoinEx being sued recently for similar reasons.
Under US law, 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. Therefore, 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 lawsuit against KuCoin is a part of the regulatory authorities’ efforts to rein in shadowy cryptocurrency companies and bring order to the industry. In a statement, New York Attorney General Letitia James said, “KuCoin operated in New York without registration, and that is why we are taking strong action to hold them accountable and protect investors.”
