On March 9, 2023, New York Attorney General Letitia James filed a lawsuit against the Seychelles-based crypto exchange Kucoin, and her office again cracked down on crypto platforms Announcement. Members of the Office of the Attorney General (OAG) were able to purchase crypto assets even though the exchange was not registered with the state. In addition to the lawsuit, James and the OAG claim that Ethereum, the second largest crypto asset by market capitalization, is a security.
Why Ethereum is considered a security, according to the OAG in New York
Two weeks ago, New York Attorney General Letitia James and the Office of the Attorney General (OAG) filed suit against Coinex. On Thursday, the OAGfiled a lawsuitagainst crypto trading platform Kucoin; the charges against Kucoin include failing to register as a securities and commodities broker and misrepresenting itself as an exchange. James detailed that through this lawsuit, he hopes to prohibit Kucoin from operating in New York and said it is the latest enforcement action to “curb cryptocurrency platforms.”
The lawsuit also details crypto assetsethereum (ETH), terra (LUNA), and terrausd (UST) are securities.” The petition allegesthat ETH, like LUNA and UST, is a speculative asset that relies on the efforts of third-party developers to provide benefits to holders of, ETH,” the complaint’s press release details on Thursday. Because the New York OAG considers these crypto assets to be securities, Kucoin could not register as a licensed broker in the state.28} The lawsuititself explains why it defines ethereum (ETH) as a security, as follows
[Ethereum] is promoted as an investment. The developers of [Ethereum] promoted it as an investment conditioned on the growth of the Ethereum network. For example, the Ethereum Foundation notes on its website that many [Ethereum] users “view it as an investment, just like Bitcoin and other cryptocurrencies.” Moreover, the ICO document included a representation that [Ethereum] production would slow dramatically over time, resulting in [Ethereum] becoming increasingly scarce and, therefore, more valuable.While the news that Kucoin has been sued by James and the OAG is interesting, the crypto community isfocused on the fact that the New York Attorney General has called Ethereum (ETH)a security. After James’ press release and court filing were published, the topic of whether or not Ethereum is a security became a hot topic on social media and crypto forums.
The crypto economy has fallen in response to the news and is currently below the $1 trillion mark, down 6.74% to $94.2 billion. Bitcoin (BTC)has fallen 7.76% in the past 24 hours, whileEthereum (ETH)has dropped 7.54% against the USD.
Do you think the actions of the New York Attorney General will have a significant impact on the regulation of cryptocurrency platforms? Also, do you favor declaring Ethereum as a security? Share your thoughts on this topic in the comments section below.
Image credit: Shutterstock, Pixabay, Wiki Commons
