On March 9, 2023, New York Attorney General Letitia James announced that her office had once again cracked down on crypto platforms by taking legal action against Seychelles-based crypto exchange Kucoin. Members of the Office of the Attorney General (OAG) have been able to purchase crypto assets, despite the exchange not being registered in the state. In addition to the lawsuit, James and the OAG insist that the second-largest crypto asset by market capitalization, Ethereum, is a security.
Why Ethereum is considered a security according to New York’s OAG
Two weeks ago, New York Attorney General Letitia James and the Office of the Attorney General (OAG) filed a lawsuit against Coinex. Thursday, the OAG filed a complaint against the Kucoin crypto trading platform. The charges against Kucoin include failing to register as a securities and commodities broker and misrepresenting itself as an exchange. James detailed that through the action she hopes to ban Kucoin from operating in New York and said this is her latest enforcement action to “limit cryptocurrency platforms.”
The lawsuit also details that the crypto assets Ethereum (ETH), terra (LUNA) and terrausd (UST) are titles. “The petition claims that ETHjust like LUNA and UST, is a speculative asset that relies on the efforts of third-party developers in order to provide profits to holders of ETH“, Details the press release of the complaint Thursday. Since the New York State OAG deems these crypto assets to be securities, Kucoin failed to register as a licensed broker in the state. THE trial himself explains why he defines ethereum (ETH) as security, since it stipulates:
(Ethereum) is presented as an investment. The developers of (Ethereum) promoted it as an investment that depended on the growth of the Ethereum network. For example, the Ethereum Foundation notes on its website that many (Ethereum) users “see it as an investment, similar to Bitcoin and other cryptocurrencies.” Additionally, the ICO documents included representations that (Ethereum) production would slow significantly over time, causing (Ethereum) to become increasingly scarce and, therefore, more valuable.
While the news of Kucoin being sued by James and the OAG is interesting, the crypto community has been concentrate about the New York Attorney General calling Ethereum (ETH) a security. Following the release of James’ press release and court filing, whether or not Ethereum is a security has become a hot conversation on social media and crypto forums.
The crypto economy is down following the news, now below the $1 trillion range, down 6.74% to $942 billion. Bitcoin (BTC) lost 7.76% in the last 24 hours, and Ethereum (ETH) lost 7.54% against the US dollar.
Do you think the actions of the New York Attorney General will have a significant impact on the regulation of cryptocurrency platforms, and do you agree with Ethereum’s statement as security? Share your thoughts on this topic in the comments section below.
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