In a suit against the exchange KuCoin, New York Attorney-General Letitia J. James was the first US regulator to assert in court that Ethereum is a financial instrument.
James claimed in his lawsuit that KuCoin, based in Seychelles, had been trading in New York for years without being registered as a broker-dealer in securities and commodities.
James James: KuCoin allows for the trading of ETH “a speculative asset that relies on the efforts of third-party developers in order to provide profit to the holders of ETH.” The exchange should have registered before offering ETH, LUNA and TerraUSD — all of which fall under the securities classification, according to James.
The NYAG might not be the last word on this issue. Rostin Behram, CFTC Director told Senate Agriculture Committee on Wednesday that ETH was a commodity and not a financial instrument.
“We would not have allowed the Ether futures product to be listed on a CFTC exchange if we did not feel strongly that it was a commodity asset,” He clarified.
SEC leaders made similar comments. William Hinman said that in 2018, William Hinman was the Director of Corporate Finance for the SEC. He stated, “Both bitcoin and Ethereum are not securities.” The SEC Director of Corporate Finance William Hinman argued in a speech that both bitcoin and ETH are not securities. “decentralized” ETH has become a mainstream cryptocurrency despite the initial coin offerings in 2014. “sufficiently decentralized” In the last four-years, we have made it non-secure.
In the lawsuit it is stated that the Office of the State Attorney General has confirmed KuCoin’s purported illegal acts because OAG Detective Brian Metz, who transacted the exchange out of New York in May 2022.
KuCoin Earn is also a non-registered securities offering according to the complaint.
According to the lawsuit, OAG issued a subpoena to KuCoin on January 10, 2023. However, respondents failed to respond and did not appear for a testifying date as specified by the subpoena.
This lawsuit is very similar to a case brought in February against the CoinEx exchange, alleging that the exchange provided trading services of tokens such as AMP, LUNA, and LBC. The Attorney General’s Office says these are all securities.
Tags
- The ether
- Kucoin
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