Mayhem Reigns in Crypto Market: KuCoin Sued, SVB Scrambles

• New York’s Attorney General Letitia James sued KuCoin.
• Silicon Valley Bank stock plummets after its sale of assets and stocks
• The White House imposed a 30% tax on mining electricity.

Binance CEO Changpeng Zhao, aka CZ, recently tweeted about the turmoil in the cryptocurrency market this week, stating that he slept for only four hours and woke up to chaos. Among the challenges were Silicon Valley Bank’s (SVB) stock plummets, a lawsuit against KuCoin, a flash crash in the Huobi token, and a government-imposed tax on mining electricity. 

New York’s Attorney General, Letitia James, has sued KuCoin for violating the Martin Act, a powerful state securities law, by failing to register with the state before allowing investors to trade cryptocurrencies on its platform.

According to the press release, the platform has also been accused of transacting in cryptocurrency commodities and securities without being registered. Secondly, selling the “KuCoin Earn” product to generate income for itself and investors and calling itself an “exchange” when it is not. Finally, represented itself as an “exchange” without appropriate registration.

James is seeking a permanent injunction to halt KuCoin from operating in New York until it complies with the law. The Attorney General commented:

One by one my office is taking action against cryptocurrency companies that are brazenly disregarding our laws and putting investors at risk.

Moreover, SVB, an American commercial bank, has also caused concerns in the market after it announced a significant sale of assets and stocks aimed at raising additional capital. Shares in the bank collapsed over 60%, wiping $80 billion in value from its shares. The closure of crypto bank Silvergate a day earlier has only added to the fears about the future of SVB.

In addition to these events, the White House has proposed a 30% tax on mining electricity under a budget proposal by President Joe Biden aimed to “reduce mining activity.” Based on the proposal:

Any firm using computing resources, whether owned by the firm or leased from others, to mine digital assets would be subject to an excise tax equal to 30 percent of the costs of electricity used in digital asset mining.

Despite these challenges in the market, many investors remain optimistic about the long-term potential of cryptocurrencies, although it remains to be seen how these issues will be resolved.

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