Why KuCoin Is Exiting New York After $22 Million Settlement

  • KuCoin settles a $22 million lawsuit with New York state regulators over alleged commodities and securities violations.
  • New York’s Attorney General Letitia James intensifies efforts against crypto entities, pursuing legal actions to regulate and protect investors within the state.

KuCoin, a prominent digital asset exchange headquartered in Seychelles, has reached a pivotal settlement with New York state regulators, marking the latest development in the state’s efforts to tighten the reins on non-compliant crypto service providers.

The settlement requires KuCoin to pay $22 million in restitution and penalties to resolve a lawsuit filed by New York authorities, alleging violations related to commodities and securities. Among the key components of the agreement, $5.3 million will be paid directly as penalties to the state, with the remaining $16.7 million designated for reimbursing roughly 177,800 resident investors. Additionally, KuCoin has committed to a complete cessation of its operations within the state.

Despite the regulatory pressure and the significant settlement, KuCoin’s native token, KCS, has witnessed an upsurge, trading at over $13.30 at the time of reporting. The token’s noteworthy gains were highlighted as it emerged among the top performers on December 12.

Source: CoinMarketCap

New York’s Crackdown on KuCoin and the Crypto Industry

New York Attorney General Letitia James initiated legal action against KuCoin in March, alleging the exchange operated an unregistered commodities and securities platform, allowing New York residents to engage in crypto trading without obtaining the necessary regulatory licensing.

The lawsuit further raised questions about Ethereum (ETH), identifying it as a security within the realm of the legal proceedings.

This legal confrontation with KuCoin is one of several litigations the Attorney General’s office has undertaken against crypto entities suspected of operating unlawfully within New York. These actions align with the state’s comprehensive Crypto Regulation, Protection, Transparency, and Oversight Act.

Previously, Attorney General James pursued legal action against Alex Mashinsky, the former CEO of Celsius Network, and his company for alleged fraud. CoinEx faced a prohibition from conducting business in New York and paid a $1.7 million penalty to settle charges.

Furthermore, in October 2023, the Attorney General’s office filed a massive $1 billion crypto fraud lawsuit against industry players Gemini, Genesis, and Digital Currency Group (DCG). DCG’s CEO, Barry Silbert, dismissed the suit as “baseless.”

Letitia James and her team have consistently emphasized the necessity of standardized crypto regulations in the United States. They advocate for policies that ensure the secure operation of crypto entities while safeguarding the interests of digital asset users.

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