KuCoin Settles Lawsuit, Agrees To Block New York Customers And Pay $22 Million
In a significant development, KuCoin, one of the leading cryptocurrency exchanges, has settled for $22 million and agreed to cease trading activities in New York to resolve a lawsuit brought against it by the state.
New York Investors To Receive $16.7 Million In KuCoin Settlement
According to a Bloomberg report, KuCoin will refund a total of $16.7 million to approximately 177,800 New York investors under the settlement terms. In addition, the exchange will pay a $5.3 million fine to the state, as announced by New York Attorney General (NYAG) Letitia James.
The settlement results from allegations that KuCoin failed to register as a securities and commodities broker-dealer while “falsely” presenting itself as a cryptocurrency exchange.
New York Attorney General Letitia James emphasized the alleged risks posed by “unregistered offshore crypto platforms” to investors, consumers, and the broader economy. NYAG Letitia James stated:
I will continue to take action against any company that brazenly disregards the law and jeopardizes New Yorkers’ savings and investments.
KuCoin, headquartered in the Seychelles (Africa), operates a website and app that enables investors to trade digital assets. However, the exchange cannot legitimately claim to be registered with the SEC or properly designated by the Commodity Futures Trading Commission (CFTC), as mandated by state law.
NYAG Pursues Crypto Companies?
According to Bloomberg, the lawsuit against KuCoin closely follows similar legal action brought by Attorney General Letitia James against CoinEx, another crypto platform. In a previous case, the state reached a settlement of as much as $24 million with Nexo Inc. and Nexo Capital Inc., two crypto companies accused of similar violations.
These legal actions have raised questions about which crypto assets regulators consider as “securities,” subject to existing rules, laws, and the jurisdiction of the SEC, fueling an ongoing policy debate and litigation.
New York Attorney General Letitia James has also made headlines by filing a lawsuit against Alex Mashinsky, former CEO of Celsius Network, for allegedly defrauding investors of billions of dollars by misrepresenting the safety of his once-prominent crypto lending platform. Mashinsky has subsequently faced fraud charges by federal prosecutors.
Furthermore, New York secured a $1 million settlement with BlockFi Lending LLC for offering unregistered securities as part of a broader agreement totaling $100 million with the SEC and state regulators.
Ultimately, as part of the settlement, KuCoin must take measures to prevent New Yorkers from accessing its platform. The exchange must also cooperate with US law enforcement by promptly responding to information requests and freezing assets when necessary, as Attorney General Letitia James stipulated.
KuCoin’s native token, KCS, experienced a staggering 22% uptrend over the past 24 hours on the daily chart. Source: KCSUSDT on TradingView.com
Featured image from iStock, chart from TradingView.com