In a significant move, KuCoin, one of the world’s largest cryptocurrency exchanges, has agreed to cease operations for users in New York and pay a hefty $22 million to settle a lawsuit brought by the state’s Attorney General, Letitia James. The lawsuit, filed in March, accused the Seychelles-based platform of neglecting to register with the state before enabling investors to engage in cryptocurrency transactions on its platform.
Attorney General James emphasized that crypto companies must adhere to the same rules as traditional financial institutions. This settlement reflects the ongoing efforts by regulatory authorities to establish control over digital asset companies and ensure compliance with legal requirements.
As part of the settlement, KuCoin has committed to discontinuing the trading of securities and commodities in New York. This development aligns with the broader trend of increased scrutiny by U.S. regulators and law enforcement agencies targeting fraud, money laundering, and insufficient investor protections within the cryptocurrency space.
The legal action against KuCoin follows similar lawsuits against other crypto firms. In October, James’ office filed a lawsuit against cryptocurrency firms Genesis Global, its parent company Digital Currency Group (DCG), and Gemini, alleging defrauding investors of over $1 billion. DCG dismissed the lawsuit as baseless. Earlier in June, the Attorney General reached a $1.8 million settlement with Hong Kong-based cryptocurrency exchange CoinEx for illegal operations due to a failure to register with the state.
Recent legal developments in the cryptocurrency industry have highlighted the intensified regulatory focus on addressing illicit activities and enhancing investor safeguards. Last month, FTX founder Sam Bankman-Fried faced federal charges related to allegedly embezzling billions of dollars from the exchange’s customers. Simultaneously, the founder of rival exchange Binance agreed to plead guilty to violating U.S. anti-money laundering laws.
The $22 million settlement by KuCoin comprises a $5.3 million payment to the state and the refunding of $16.7 million worth of cryptocurrency to approximately 177,800 New York investors. This substantial payment underscores the regulatory consequences faced by crypto entities for non-compliance.
KuCoin, while a major player in the cryptocurrency exchange landscape, trails behind Binance, Coinbase, and Kraken in factors such as traffic, liquidity, and trading volumes, according to data from CoinMarketCap. The settlement marks a significant step in KuCoin’s journey, emphasizing the evolving landscape of regulatory expectations within the crypto industry.
