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KuCoin, a cryptocurrency exchange based in the Seychelles, has come under scrutiny from American authorities. The New York state attorney general is seeking to hold the exchange accountable for operating without registration.
According to the lawsuit, KuCoin was selling unauthorized securities and commodity assets to users.The regulation of the crypto industry continues to be a priority for US regulators, who have been pursuing exchanges which are improperly registered. This is the eighth case filed against “suspicious cryptocurrency platforms,” according to the attorney general.
The lawsuit specifically mentions Ethereum as an unregistered security that KuCoin sold and bought from users. It has been up for discussion whether the second-largest cryptocurrency should be considered a security. Ethereum, one of the most popular cryptocurrencies, has only recently been referred to as a security, and this case is one of the first examples of such.
KuCoin also offered users KuCoin Earn, which the lawsuit claims is also a security. The exchange is accused of selling it without a license or registration as a broker or dealer of securities. US authorities believe such measures will bring clarity to the activities of cryptocurrency exchanges in the country.
Crypto exchanges may be sued by US officials if they are thought to be breaking disclosure rules. This frequently occurs when commodities and securities are sold without being properly registered. The same regulator recently filed a lawsuit against CoinEx for breaking the same laws.
The Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC) are the two principal bodies in charge of overseeing financial markets in the US (CFTC). They are in charge of the nation’s commodity and security trading. Each business wanting to offer securities or commodities is required by US law to register with the appropriate authority and adhere to a number of standards and regulations.
Concerns About Safety
BeInCrypto previously investigated if US regulators would classify cryptocurrency as securities. Depending on the details of the commodities they provide to customers, crypto exchanges offering trading of securities or commodities assets could be subject to these laws and regulations.
The SEC and CFTC have increased their efforts to effectively regulate the cryptocurrency market over the past few years. When they feel a company or person has broken the law or committed fraud, they have cautioned them and filed a lawsuit against them.