On March 9, 2023, New York Attorney General Letitia James announced that her office had once again cracked down on cryptocurrency platforms by filing a lawsuit against Seychelles-based cryptocurrency exchange Kucoin. Members of the Office of the Attorney General (OAG) were able to purchase crypto assets, despite the fact that the exchange was not registered with the state. Adding to the lawsuit, James and the OAG insist that the second-largest crypto asset by market capitalization, ethereum, is a security.
Why Ethereum is considered a security according to the OAG of New York
Two weeks ago, New York Attorney General Letitia James and the Office of Attorney General (OAG) filed a lawsuit against Coinex. On Thursday, the OAG filed a lawsuit against the crypto trading platform Kucoin. The charges against Kucoin include failing to register as a securities and commodities broker and falsely presenting itself as an exchange. James detailed that through the action, he hopes to ban Kucoin from operating in New York, saying it was his latest enforcement action to “control cryptocurrency platforms.”
The lawsuit also details that crypto assets Ethereum (ETH), terra(LUNA) and terrausd(UST) are securities. “The petition maintains that ETHLike LUNA and UST, it is a speculative asset that relies on the efforts of third-party developers to generate profit for license holders. ETH”, details the press release of the complaint on Thursday. Because the New York State OAG believes these crypto assets are securities, Kucoin did not register as a licensed broker in the state. He lawsuit itself explains why you define ethereum (ETH) as a guarantee, as established:
(Ethereum) is promoted as an investment. The developers of (Ethereum) promoted it as an investment that depended on the growth of the Ethereum network. For example, the Ethereum Foundation notes on its website that many (Ethereum) users “view it as an investment, similar to Bitcoin and other cryptocurrencies.” Furthermore, the ICO Documents included representations that (ethereum) production would drop dramatically over time, resulting in (ethereum) becoming increasingly scarce and therefore more valuable.
While the news that James and the OAG sued Kucoin is interesting, the crypto community has been in focus about the fact that the New York Attorney General is calling Ethereum (ETH) a guarantee. After James’ press release and court filing were published, the topic of whether or not ethereum is a security has become a topical conversation on social media and crypto forums.
The crypto economy is down after the news, now below the $1 trillion range, down 6.74% at $942 billion. Bitcoin (BTC) lost 7.76% in the last 24 hours, and Ethereum (ETH) it has lost 7.54% against the US dollar.
Do you think the actions of the New York Attorney General will have a significant impact on the regulation of cryptocurrency platforms and do you agree with the declaration of ethereum as a security? Share your thoughts on this topic in the comments section below.
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