New York Attorney General Letitia James became the first regulator in the US to claim in court that ethereum is a security in a lawsuit against exchange KuCoin.
Seychelles-based KuCoin has been operating in New York without registering as a securities and commodities broker-dealer, James alleged in the suit.
KuCoin facilitates trading of ETH, James added, “a speculative asset that relies on the efforts of third-party developers in order to provide profit to the holders of ETH.” The exchange should have registered before offering ETH, LUNA and TerraUSD — all of which fall under the securities classification, according to James.
However, the NYAG may not have the final say on the issue. Rostin Behnam of the CFTC told the Senate Agriculture Committee as recently as Wednesday that ETH is in fact a commodity, not a security.
“We would not have allowed the Ether futures product to be listed on a CFTC exchange if we did not feel strongly that it was a commodity asset,” he explained.
KuCoin’s lending and staking product, KuCoin Earn, is also an unregistered security offering, the lawsuit alleges.
The lawsuit is similar to a suit brought against exchange CoinEx in February alleging the exchange offered trading services for tokens including AMP, LUNA and LBC, all of which the Attorney General’s office says are securities.
This is a developing story.
Source: https://blockworks.co/news/eth-security-alleges-nyag