According to a report, KuCoin, one of the world’s leading cryptocurrency exchanges, has reached a crucial agreement with New York regulators. This agreement involves a substantial $22 million settlement and marks the end of KuCoin’s operations in New York, a move that impacts its market dominance.
KuCoin Ends Its Month-Long Lawsuit
KuCoin, recognized as one of the global giants in the cryptocurrency exchange market, has reached an agreement to restrict access for users in New York on its platform and will pay $22 million to resolve a legal dispute initiated by the state. This settlement is part of New York’s plans to regulate companies dealing with digital assets.
The lawsuit against the Seychelles-based KuCoin was filed in March by Attorney General Letitia James. She charged the exchange with operating in the state without the necessary registration, a requirement for platforms that allow trading of cryptocurrencies by investors.
The agreement, which includes KuCoin’s commitment to cease trading in securities and commodities in New York, arrives amidst intensified efforts by U.S. regulators and law enforcement to tackle issues such as fraud, money laundering, and insufficient investor safeguards within the cryptocurrency sector.
James said in a statement, “Crypto companies should understand that they must play by the same rules as other financial institutions.”
James stated that KuCoin breached the Martin Act, a significant state securities legislation, through its dealings in cryptocurrencies. This includes selling “KuCoin Earn,” a product developed for generating revenue for both the platform and its investors, and inaccurately labeling itself as an “exchange.”
James in March noted that KuCoin enabled investors to trade well-known digital currencies like ETH, LUNA, and TerraUSD. She then highlighted that her regulatory action was one of the first instances where ETH is being classified as a security.
NY Tightens Its Crypto Scrutiny
KuCoin’s total settlement of $22 million includes a $5.3 million payment to the state and the reimbursement of cryptocurrency valued at $16.7 million to 177,800 investors in New York. In October, the office of James sued the cryptocurrency entities Genesis Global and its parent company, Digital Currency Group, along with Gemini, accusing them of defrauding investors out of over $1 billion. Digital Currency Group dismissed the lawsuit as without merit.
In June, James’ office concluded a $1.8 million settlement with the Hong Kong-based cryptocurrency exchange CoinEx. This settlement was due to CoinEx operating illegally, as it had not registered with the state.
Last month saw significant developments in the market. FTX founder Sam Bankman-Fried was found guilty on federal charges for misappropriating billions of dollars from customers of the exchange. Additionally, the founder of Binance consented to plead guilty to charges of violating U.S. anti-money laundering regulations. The New York Department of Financial Services recently tightened rules for crypto coin listings, focusing on retail client-targeted coins.
