Crypto exchange KuCoin will pay a $5.3M fine to the NY Attorney General’s Office to settle a lawsuit that alleges ETH is a security.
Per a recent order from the Supreme Court of New York, leading crypto exchange KuCoin admitted to operating an unregistered crypto trading platform allowing users, including New York residents, to buy and sell crypto assets labeled as securities and commodities under the state’s law.
Additionally, KuCoin admitted that it did not register as a securities or commodities broker-dealer under the laws of New York State.
To resolve the charges, KuCoin agreed to pay $22 million to the New York state and block its residents from accessing its trading platform.
KuCoin Sued for Violating Securities Law
For context, the Attorney General of the State of New York charged KuCoin with violating securities law in March.
Per the complaint, KuCoin was accused of operating an unregistered securities exchange and facilitating the trading of crypto assets deemed as securities, including Ether (ETH).
The lawsuit marked the first time a regulator publicly labeled ETH security. Instead of defending itself like other crypto exchanges embroiled in similar cases against U.S. regulators, KuCoin settled the charges with the NYAG office.
NYAG and KuCoin Settlement
As part of the deal, KuCoin will pay $22 million to the state of New York.
Out of the $22 million, KuCoin will refund $16.76M to its New York customers while the remaining $5.3 million will be paid as a fine to Letitia James, the state’s Attorney General.
Furthermore, KuCoin will close the accounts belonging to its New York customers no later than 120 days. While existing New York customers can withdraw their funds from KuCoin within 30 days of the consent order, the exchange will prohibit the state’s residents from opening new accounts.
KuCoin CEO Confirms the Settlement
In a tweet yesterday, KuCoin CEO Johnny Lyu also confirmed the development. Lyu stated that the settlement solidifies KuCoin’s commitment to compliance operations.
1/ I want to update all of you about our latest compliance action. @kucoincom has reached a settlement with the New York Attorney General (NYAG), solidifying our commitment to compliant operations.
— Johnny_KuCoin (@lyu_johnny) December 12, 2023
According to the CEO, KuCoin will send an email or SMS to affected users within the next ten days. Lyu assured users that their funds are safe while urging them to prepare for potential rumors that could make the rounds in the coming weeks due to the settlement.
Disclaimer: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic’s opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
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