KuCoin has reached a settlement of USD $22 million with the state of New York and committed to ceasing its services for users in the region, according to an order filed in the Supreme Court today (Tuesday). The crypto exchange was charged for offering, selling, and purchasing cryptocurrencies as securities and commodities, breaching New York's laws.
KuCoin has acknowledged these allegations, agreeing to a payment of $5.3 million and specific obligations. These include terminating access to its services for users in New York within a stipulated timeframe, ceasing account creation, and restricting existing accounts solely for withdrawal purposes.
Additionally, KuCoin has committed to returning current account balances, valued at approximately $16.7 million in fiat and cryptocurrencies, held by customers in New York. This restitution process involves facilitating withdrawals and transferring remaining balances to a third-party fund administrator for subsequent distribution to the affected users.
KuCoin's Agreement to Halt Services in New York
KuCoin's compliance with the agreement involves a commitment to cease operations for users in the region, ensuring strict adherence to the terms and conditions of consent orders.
Cryptocurrency exchange KuCoin has agreed to pay $22 million to settle a lawsuit brought by the New York Attorney General’s Office. Following the settlement, KuCoin will exit the New York market. Previously in March, NYAG accused KuCoin of operating without a license and…
— Wu Blockchain (@WuBlockchain) December 12, 2023
In March, New York State's Attorney General, Letitia James, filed a lawsuit against KuCoin. She alleged that the exchange operated illegally within the state. The lawsuit marked a pivotal moment as it was the first time a regulatory body labeled Ether, alongside other cryptocurrencies, as securities under the Martin Act.
The lawsuit accused KuCoin of offering unregistered securities through its KuCoin Earn product, a lending and staking service. The case was substantiated by the NYAG's office, which interacted with the platform using a New York IP address, conducting transactions and demonstrating the platform's operational engagement.
KuCoin Faces Mounting Regulatory Challenges
Last year, South Korea's Financial Intelligence Unit (FIU)intensified its crackdown on unauthorized overseas crypto exchanges, scrutinizing 16 platforms, including KuCoin. These platforms allegedly operated in the country without complying with local regulatory guidelines.
The exchange allegedly failed to adhere to the country's Financial Information Act. Thus, the FIU urged the Korea Communications Commission to block access to the websites and mobile applications of this platform.
This article was written by Jared Kirui at www.financemagnates.com.
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