KuCoin to Pay $22 Million and Exit New York in Landmark Settlement
Rebeca Moen Dec 13, 2023 07:52
KuCoin settles with NYAG for $22M and bans NY users, marking a major regulatory move in crypto, with implications for securities law and exchange compliance.
One of the most prominent cryptocurrency exchanges in the world, KuCoin, has achieved a large settlement with the Attorney General's Office of the state of New York. A significant step forward in the regulation of cryptocurrency exchanges in the United States has been taken with the signing of this deal, which includes a payment of $22 million and a vow to suspend operations for residents of New York State.
A total of twenty-two million dollars will be paid to the state of New York by KuCoin in accordance with the agreement and consent order that was submitted to the Supreme Court of New York. This total comprises payments to the Attorney General's Office totaling $5.3 million and reimbursements to New York consumers totaling $16.77 million. At issue in the settlement are allegations that KuCoin violated securities laws by selling tokens, including ether, as securities without first registering them in accordance with the applicable regulations.
The action, which was brought forward by the Attorney General of New York, Letitia James, was the first time that a regulator asserted in a court of law that ether constituted a security. This ground-breaking claim reflects the constantly growing understanding of cryptocurrencies as financial instruments as well as the regulation of such cryptocurrencies.
It was noted by KuCoin CEO Johnny Lyu that the payment is an endorsement of the exchange's commitment to conducting operations in compliance with regulations. This decision comes at a time when the regulatory environment for bitcoin platforms throughout the world is undergoing significant change.
As part of the settlement, KuCoin will remove access for users in the state of New York within a period of one hundred twenty days beginning on the day that the order went into effect. The exchange will only allow users to withdraw money during a period of thirty days, and users will have a term of ninety days within which they may withdraw cash. This move is in line with the needs of regulatory agencies and KuCoin's evolving attitude to compliance, which is a departure from the company's former stance of protecting users' privacy.
Previously, KuCoin was well-known for its pro-privacy philosophy, which opposed Know Your Customer (KYC) and Anti-Money Laundering (AML) legislation. The company's primary focus was on bitcoin transactions. Since then, this policy has undergone a transformation in order to conform to the legal standards, which is a reflection of the constant conflict that exists in the Bitcoin sector between privacy and compliance.
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