As evident in a lawsuit against KuCoin, the lack of clear-cut regulation in the U.S. has continued to generate a heat of controversy. In a Lawsuit filed against the cryptocurrency exchange by the New York State Attorney General, Letitia James on Thursday, the Attorney referred to ETH as a security.
In the lawsuit, James alleged that KuCoin is an uncertified commodity and securities broker and dealer. Further, James argued that KuCoin didn’t register with his office before offering securities like ETH, LUNA and UST. Backing his claims, the Attorney cited the Martin Act, arguing that the virtual tokens mentioned earlier are securities. More so, James opined that KuCoin promoted them as a means of making a profit.
While arguing further, the Attorney General said the Managerial endeavours of the team behind the virtual tokens convinced investors to acquire them. Therefore, giving these investors hope of making a profit from them, with the growth of their respective networks convincing investors the more.
While pressing ahead in the lawsuit against KuCoin, James recalled how a part of the tokens were reserved for their developers. With that, the fortunes of the tokens became attached to the developers, thus, establishing a common enterprise.
Accordingly, the Attorney General prayed to the court to refrain KuCoin from operating in New York. Additionally, James said IP addresses from the state should as well be prevented from using the exchange’s app, website and other related products.
How the lawsuit against KuCoin has created more confusion
Letitia James’ argument in classifying ETH as a security highlights why the relevant bodies must hasten up the regulatory process. Presently, the Securities and Exchange Commission regards ETH as a commodity.
However, seeing a relevant regulator coming out to say otherwise illustrates the height of the growing confusion. Also, James’ argument in the lawsuit against KuCoin established the importance of proper regulation for the crypto industry.
Meanwhile, legal experts have postulated that the U.S. is likely lose its high-flying place in the world of finance. In a thread of tweets yesterday, Chief Legal Officer of Coinbase, Paul Grewal explained the importance of crypto regulation in the U.S. Grewal said, “the US risks losing its position as a financial leader without clear rules and regulations for crypto.”
Truly, the lack of regulation and excesses of the SEC is affecting the growth of the crypto industry in the U.S. Recently, other regions are attracting crypto firms into their space with supporting business environment. Leaving, the U.S at the risk of losing its global status as opined by Paul Grewal. The lawsuit against KuCoin can champion the course.
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