Regulators are being active more than ever before, attacking almost all crypto exchanges one by one. Now it’s KuCoin’s turn to be under the radar.
KuCoin is being sued by OAG
In the midst of the Silvergate collapse and crypto market selloff, regulators are going after KuCoin for failing to register “as a securities and commodities broker-dealer and falsely representing itself as an exchange.”
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New York Attorney General, Letitia James, has officially filed a lawsuit against KuCoin Exchange. The news immediately spread more fear in the crypto space, as usual. KuCoin’s native token plunged by 8%, with a competitor Huobi thinking they’re next.
KuCoin token chart, source: coinmarketcap.com
As a result, Huobi’s token flash crashed from $4.8 to $0.3 within a few hours, but then immediately bought off and jumped to $3.8. The fear amongst crypto exchanges could cause more selloffs on exchange tokens as regulators are going after crypto entities hard this year.
“The Attorney General James seeks to stop KuCoin from operating in New York and to block access to its website until it complies with the law,” the press release stated.
KuCoin is not the only crypto exchange that’s not registered in the state of New York. Coinbase, Kraken, Bitfinex, and other major crypto exchanges could face a similar lawsuit soon if they don’t comply with the law.
Failure to understand cryptocurrencies
Moreover, the second largest cryptocurrency by market cap, Ethereum (ETH), is called out as a security in the current lawsuit. Here we go again. The petition even compares ETH to LUNA and UST with the same old marking cryptocurrencies as commodities or securities.
They fail to understand that cryptocurrencies are cryptocurrencies, not commodities or securities. The Office of the Attorney General (OAG) is even going after the KuCoin Earn product, where users can lend and stake crypto products.
Needless to say that all major crypto exchanges have a very similar service. Are they going to sue all of them? It looks like 2023 will be a year of fights between regulators and major industry players.
Regulators are coming hard after crypto exchanges and other crypto institutions, which may have certain consequences. However, it doesn’t necessarily mean the end of crypto. In this lawsuit specifically, OAG is mainly coming after KuCoin’s operations in New York, not as a whole.