CFTC Commissioner Pham says KuCoin complaint ‘undermines’ SEC 

The CFTC’s complaint classifies KuCoin’s “leveraged tokens” as digital asset commodity derivatives

article-image

Ascannio/Shutterstock modified by Blockworks

share

Days after the Commodity Futures Trading Commission announced its civil lawsuit against crypto exchange KuCoin, one Commissioner is questioning whether the agency is overstepping. 

Commissioner Caroline Pham in a statement Friday criticized the “aggressive enforcement action,” saying the complaint misinterprets what can be classified as “leveraged trading” and is therefore under the CFTC’s purview. 

The complaint, filed Tuesday, classifies KuCoin’s “leveraged tokens,” which represent “shares” in funds controlled by the exchange, according to KuCoin, as digital asset commodity derivatives. 

Read more: CFTC calls ETH a commodity in KuCoin complaint

The CFTC alleges KuCoin violated the Commodity Exchange Act by offering these products, among others, without registration. 

“This interpretation fails to distinguish between an investment in a fund, which would typically be a security under the jurisdiction of the [Securities and Exhcnage Commission], and the trading activities of a fund, alleged here to be under the CFTC’s jurisdiction,” Pham wrote

If the leveraged tokens are securities, as Pham suggests, regulation of the products would fall under the SEC’s jurisdiction. The CFTC complaint undercuts securities regulators’ ability to oversee markets, Pham said. 

Read more: Crypto, it’s time to demand clarity from the courts

“The CFTC’s approach may infringe upon the SEC’s authority and undermine decades of robust investor protection laws by conflating a financial instrument with a financial activity, disrupting the foundations of securities markets,” Pham wrote. “Owning shares is not the same thing as trading derivatives.”

While the SEC has set its sights on other crypto exchanges, including Binance and Coinbase, it has yet to file an enforcement action against KuCoin, at least publicly. 

KuCoin last December settled charges from New York Attorney General Letitia James’ office for $22 million for allegedly operating an unregistered exchange. That case notably referred to ether as a security, whereas the CFTC, in this latest complaint, lists ether and other cryptocurrencies as commodities.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research Report Templates (2).png

Research

We’re bullish on the PUMP token. We believe Pump.fun's brand strength, existing integrations, product roadmap, and strategic levers justify PUMP's TGE valuation, and expect the token to re-rate meaningfully higher in the months ahead.

article-image

The non-profit’s “Project Open” seeks to let stocks trade directly on Solana

article-image

The acquisition is Pump.fun’s first, and comes just days before its planned ICO

article-image

As Trump’s tariff war reignites, everyone is assuming the dollar will continue its path lower. But the journey might be bumpy

article-image

A valuation model for “blockchain GDP”

article-image

The mini app combines vibe-coding with a hypercasual game feed and is coming to the new Coinbase Wallet

article-image

An improbable tale of the world’s 40th graphics-chip startup