New York Attorney General calls Ethereum a security in latest lawsuit against KuCoin
New York Attorney General Letitia James has declared Ethereum’s native ETH token and other cryptocurrencies “securities and commodities” in a statement related to her lawsuit against cryptocurrency exchange KuCoin. She further explained that KuCoin illegally facilitated the trading of digital assets to people in New York, a state where the platform is not legally registered.
The Office of the Attorney General (OAG) has been able to buy and sell cryptocurrencies on KuCoin from New York, even though the company is not registered in that state. Additionally, AG James mentioned that the platform allows traders, including those residing in New York State, to buy and trade popular virtual currencies such as ETH, LUNA, and TerraUSD (UST), which are securities and commodities sell.
Implications of Ethereum being classified as a security in the US
The US Attorney General’s statement is an unexpected move as it is the first time a regulator has identified Ethereum (ETH) as potentially a security under US law. Should this classification be confirmed, it could have far-reaching implications for the cryptocurrency industry. This scenario has raised a lot of concern within the Ethereum community, although the exact impact it would have on Ethereum and the price of ETH remains to be seen.
The Ethereum Foundation, which significantly supports the development of the Ethereum network, is not registered in the USA but in Switzerland. Additionally, much of the trading and exchanges for ETH and other altcoins take place on offshore platforms that are not subject to US regulation.
Rostin Behnam, Chairman of the Commodity Futures Trading Commission (CFTC), has previously stated that Bitcoin (BTC) is the only digital asset that can be recognized as a commodity for regulatory purposes.
Gary Gensler, chairman of the Securities and Exchange Commission (SEC), has called Bitcoin a commodity in the past but has not provided insight into his views on other cryptocurrencies.
Attorney General James claimed that the lawsuit against KuCoin is part of a larger effort to “curb cryptocurrency companies that violate our laws and expose investors to potential risk.” She noted, “My office takes action against these cryptocurrency companies individually to ensure they comply with our regulations and protect those who invest in them.”
“All New Yorkers and all businesses doing business in New York must obey the laws and regulations of our state. Unfortunately, KuCoin was operating in New York without registration, so we are taking strong measures to hold them accountable and protect investors.”
Attorney General James
The New York Attorney General is now seeking an injunction to ban KuCoin from calling itself an “exchange” and from providing services to users in New York who are geo-restricted based on their IP addresses and GPS use location.