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KuCoin Settles for $22 Million and Exits New York Amid Legal Battle
- KuCoin settles lawsuit with New York State; agrees to stop offering services and pay US$22 million.
- Settlement sees KuCoin admit it misrepresented itself as an exchange, and was not registered in the state of NY, or nationally, with the SEC.
- NY continues to be one of the toughest jurisdictions for crypto; AG says the fight to regulate will continue.
The Seychelles-based cryptocurrency exchange, KuCoin, has agreed to stop offering its services in New York State and pay US$22 million to settle a lawsuit brought by the New York Attorney General’s office.
The lawsuit, which was filed against KuCoin in March by New York Attorney General Letitia James, alleged that KuCoin violated state laws by failing to register with the New York Department of Financial Services before allowing its NY-based users to trade crypto.
KuCoin Failed to Register, Misrepresented Itself As Exchange
The settlement requires KuCoin to refund US$16.7 million (AU$25.5 million) to over 150,000 of its New York-based users and pay a further US$5.3 million (AU$8.1 million) in penalties to the state.
According to the terms of the resolution, KuCoin has accepted that it was not registered in the state of New York as a securities or commodities broker-dealer and that it misrepresented itself as an exchange while it wasn’t registered with the Securities and Exchange Commission (SEC) as a national securities exchange.
The settlement also requires KuCoin to block New York users from its platform and close their accounts within 120 days.
Attorney General James said it serves as another reminder that crypto firms need to adhere to the same rules as other financial institutions:
Crypto companies should understand that they must play by the same rules as other financial institutions, and my office will hold them accountable when they don’t…I will continue to take action against any company that brazenly disregards the law and jeopardises New Yorkers’ savings and investments.
Letitia James, New York State Attorney General New York Tough On Crypto, Has Its Own Crypto ‘Greenlist’
New York has a reputation for being one of the most stringent jurisdictions in terms of regulating cryptocurrencies.
The Attorney General’s office settled a similar case in June against the Hong Kong-based exchange CoinEx for failing to register as an exchange and currently has another case ongoing against Genesis Global Capital, Gemini and Digital Currency Group alleging they defrauded customers to the tune of US$1 billion (AU$1.5 billion).
New York has also compiled a ‘greenlist’ of cryptocurrencies it considers compliant with relevant regulations.
Previously this list had contained 25 cryptocurrencies, including XRP, Dogecoin and Litecoin, but in September the list was whittled down to just 8.
The only non-stablecoins on the list are now Bitcoin and Ethereum — surprisingly, XRP was removed from the list despite what many consider to be favourable rulings in Ripple’s case against the SEC.
Author
Jody McDonald
Jody is a Brisbane-based freelance writer who specialises in writing about business, technology, and the future of work.
