In a recent legal development, New York Attorney General Letitia James has successfully obtained over $22 million from Kucoin, a well known crypto trading platform. This settlement arises from Kucoin’s alleged failure to register as a securities and commodities broker-dealer and its misrepresentation as a crypto exchange.
New York AG Clinches Settlement From Kucoin Over Registration Lapses
On Tuesday, the consent order applied by James mandates that Kucoin refund over 150,000 New York investors more than $16.7 million and pay an additional $5.3 million to the state. Attorney General James emphasized the reported risks associated with unregistered offshore crypto platforms to investors, consumers, and the broader economy.
She stated, “Crypto companies should understand that they must play by the same rules as other financial institutions, and my office will hold them accountable when they don’t. This settlement will ensure every New Yorker who put their money into Kucoin can get it back and that Kucoin won’t be able to put other New York investors at risk.”
James added:
I will continue to take action against any company that brazenly disregards the law and jeopardizes New Yorkers’ savings and investments.
Kucoin, an exchange based in Seychelles, allows the buying and selling of cryptocurrencies through its website and mobile app. Despite its global operations, Kucoin neglected to register with the state of New York as required by law for securities and commodities brokers. This omission has significant legal implications, particularly as Kucoin engaged in trading crypto assets that are considered commodities and securities under New York law.
Kucoin’s failure to adhere to regulatory standards extended to falsely claiming to be a registered exchange. James disclosed that such a misrepresentation is not taken lightly under New York law, which mandates registration with the Securities and Exchange Commission (SEC) for national securities exchanges and designation by the Commodity Futures Trading Commission (CFTC).
As part of the settlement, Kucoin is mandated to provide full refunds, amounting to over $16.7 million, to approximately 177,800 affected New York investors. This process involves direct withdrawal options from Kucoin for the next 90 days, followed by a claim filing system for eligible investors.
“In addition, Kucoin must take steps to prevent New Yorkers from accessing their platform and is prohibited from creating any new accounts for New York customers,” the press release noted.
What do you think about the settlement between the New York AG and Kucoin? Let us know what you think in the comments section below.
