KuCoin settles with New York AG for $22M, will depart New York

KuCoin CEO Johnny Lyu said the settlement shows the exchange’s “commitment to compliant operations”

December 12, 2023 09:59 am

Attorney General of New York Letitia James | matthewcohen93/"Letitia James" (CC license)

KuCoin will exit the New York market, pay $22 million to settle with the New York Attorney General’s office.

The company will refund around 150,000 New York customers using $16.7 million of that total sum, and $5 million will go directly to the state.

“Unregistered offshore crypto platforms pose a risk to investors, consumers and the broader economy,” said Attorney General Letitia James in a press release.

The crypto exchange, based in the Seychelles, was sued by the NYAG in March. James accused the exchange of not registering before allowing users to buy and sell crypto on its platform.

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In the original lawsuit, the NYAG alleged that ether constitutes a security. The March lawsuit claimed that KuCoin’s registration should have been filed before it offered ETH, LUNA or TerraUSD.

According to Tuesday’s press release, the NY AG’s office was able to create an account “to buy and sell cryptocurrencies, including popular tokens like ETH, LUNA, and UST. However, New York law requires securities and commodities brokers providing services in New York to register with the state…”

In a post on X, KuCoin CEO Johnny Lyu confirmed the news, saying that impacted users — those based in New York — will receive communication in the form of an email or text “in the next 10 days.”

“I also want to give you a heads-up about potential rumors surfacing in the next few weeks. Please stick to the official website of KuCoin for accurate information,” Lyu added in a follow up post.

The settlement comes a few weeks after the US Department of Justice announced a multi-billion dollar settlement against crypto exchange Binance and its former CEO, Changpeng Zhao. The NY AG’s office has actively pursued lawsuits and legal action against crypto companies that have allegedly violated New York laws.

In October, James filed a suit against Digital Currency Group, Gemini and Genesis alleging that the Gemini Earn program constituted an investment contract.

It also went after Hong Kong-based CoinEx, which subsequently settled with the state for $1.7 million and exited New York.

Updated Dec. 12, 2023 at 11:22 am ET: Added additional context throughout.

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