On March 10, the New York Attorney General (NYAG) prosecutors announced that it will sue crypto exchange KuCoin. NYAG Letitia James also said at the time that ethereum (ETH) qualifies as a security. In response, more than a thousand ethereum owners have now joined in a lawsuit against the NYAG to challenge James’s claim.
We have over 1K with approximately 57 New Yorkers. It would be great to get a couple hundred New Yorkers who want to speak up against the NYAG’s allegation that #ETH is a security, https://t.co/7OIOYjucfd
— John E Deaton (@JohnEDeaton1) March 14, 2023
Crypto an unregistered security?
Although it is not an official attack against Ethereum at the moment, it is still worrisome. Because James’ statement could take on more serious forms in the future, the lawsuit has been filed. James compares ethereum to terra (LUNA).
Qualifying as a security of crypto assets is the go-to tactics of US regulators in their fight against crypto. A license from the US Securities and Exchange Commission (SEC) is required to sell securities. If a crypto is actually recognized as a security, this can have major consequences for the trade of the coin and lead to high fines. Ripple (XRP) is currently in litigation with the SEC over this.
SEC on warpath
A few weeks ago, the SEC also went after crypto exchange Kraken. The strike services of Kraken would also be an unregistered effect. Kraken paid $30 million in a settlement and immediately stopped strike services in the United States.
Binance also got the SEC on its head for similar reasons. Binance has long been in a process to acquire the assets of bankrupt exchange Voyager. Everything seemed to be going fine until the SEC put a stop to this. One element of the acquisition, namely Voyager’s VGX tokens were, yes, an unregistered security.
However, in a court case, a judge ruled in favor of Binance. The SEC’s allegations did not outweigh the significance of the acquisition. Great news for Binance and Voyager. But also good news for the crypto sector as a whole. The American financial watchdog is therefore not invincible and that offers perspective.