"One by one my office is taking action against cryptocurrency companies that are brazenly disregarding our laws and putting investors at risk," Letitia James declares.
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The crypto markets appear to have been dragged downward by the drama at Silicon Valley Bank — but in Ether's case, there are other things to worry about.
New York's attorney general has announced that she is suing KuCoin — and her lawsuit explicitly argues that ETH is a security.
Letitia James has accused the platform of failing to register with the state, as well as the Securities and Exchange Commission and the Commodity Futures Trading Commission.
She alleges KuCoin has violated New York law because staffers in her office were able to buy and sell cryptocurrencies — and claims the company falsely represents itself as an exchange.
James is now pushing for KuCoin to be blocked from operating in New York, and she wants access to its website to be restricted until it achieves regulatory compliance. This would involve geoblocking based on IP addresses and GPS locations to ensure KuCoin's app and website cannot be visited within the state.
In a statement on Thursday, the attorney general added:
"One by one my office is taking action against cryptocurrency companies that are brazenly disregarding our laws and putting investors at risk. Today's action is the latest in our efforts to rein in shadowy cryptocurrency companies and bring order to the industry. All New Yorkers and all companies operating in New York have to follow our state’s laws and regulations. KuCoin operated in New York without registration and that is why we are taking strong action to hold them accountable and protect investors."
Her lawsuit directly compares ETH to UST and LUNA — two altcoins in the Terra ecosystem that spectacularly collapsed last May, wiping $60 billion from the crypto markets.
James argues that Ether "is a speculative asset that relies on the efforts of third-party developers in order to provide profit to the holders of ETH."
This has proven to be a controversial and divisive topic among U.S. regulators. SEC chair Gary Gensler has previously argued that he believes Ether is a security — especially following the switch to a Proof-of-Stake blockchain. But on Wednesday, CFTC chair Rostin Behnam suggested that he continues to believe ETH is a commodity.
James also has KuCoin Earn in her sights — a platform that facilitates lending and staking for customers.
KuCoin is yet to respond to the allegations, and the attorney general claims the company has failed to comply with a subpoena "to provide more information about its digital asset trading activities" in New York.
