On March 9, 2023, New York Attorney General Letitia James announced that her office had once again cracked down on crypto platforms by suing Seychelles-based crypto exchange Kucoin. 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 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. On Thursday the OAG filed a lawsuit against crypto trading platform Kucoin. The allegations against Kucoin include failing to register as a securities and commodities broker-dealer and misrepresenting itself as an exchange. James specified that through the action, she hopes to ban Kucoin from operating in New York, and said this is her latest action to enforce “reining in on cryptocurrency platforms.”
The lawsuit also specifies that crypto assets Ethereum (ETH), terra (LUNA) and terrausd (UST) are securities. “The petition claims that ETHjust like LUNA and UST, is a speculative asset that relies on the efforts of third-party developers to provide profit to holders of ETH,” details the complaint’s press release on Thursday. Because the New York State OAG considers these crypto assets to be securities, Kucoin failed to register as a licensed broker in the state. The court trial itself explains why it defines ethereum (ETH) as a security, as stated:
[Ethereum] advertised as an investment. The developers of [Ethereum] promotes it as an investment that depends 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.’ In addition, the ICO documents include representations that [ethereum] production will slow dramatically over time leading to [ethereum] becoming increasingly scarce and therefore more valuable.
While the news of Kucoin being sued by James and the OAG is interesting, the crypto community is interesting focused about the fact that the Attorney General of New York is calling Ethereum (ETH) valuable book. Since the release of James’ press release and court declaration, the topic of whether or not ethereum is a security has become a hot topic of conversation on social media and crypto forums.
The crypto economy fell on 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) has 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 the declaration of ethereum as a security? Share your thoughts on this topic in the comments section below.
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