In a world where cryptocurrency is a rapidly evolving economic aspect, New York State has ramped up its efforts to regulate crypto companies and protect potential investors. KuCoin, one of the most sizable cryptocurrency exchanges globally, has chosen to comply with these rules in a rather costly way.
The Seychelles-based crypto platform recently agreed to pull its services from the Empire State and pay a hefty $22 million settlement as part of a lawsuit filed by the state. The news underscores the importance of crypto establishments adhering to financial regulations similar to other institutions.
Crypto's Tough Stance in New York
New York Attorney General Letitia James sued KuCoin earlier this year, alleging the exchange for neglecting to register with the state before facilitating cryptocurrency trades for its investors. The lawsuit forms part of New York's broader drive to bring digital asset companies under tighter scrutiny.
"Crypto companies should understand that they must play by the same rules as other financial institutions," James firmly stated.
Mounting Pressure on Crypto Platforms
The KuCoin lawsuit comes as US regulators and law enforcement agencies are increasingly probing fraud cases, inadequate investor protections, and money laundering within the cryptocurrency sector.
The Attorney General's office previously took legal action against cryptocurrency firms Genesis Global, its parent company Digitial Currency Group, and Gemini for alleged investor fraud to the sum of over $1 billion. Hong Kong-based cryptocurrency exchange CoinEx was also slapped with a $1.8 million settlement for operating illegally.
A Turning Point for KuCoin
As part of the $22 million agreement, KuCoin has undertaken to stop trading securities and commodities in New York - a move that has stirred discussions in the crypto world.
The settlement sum comprises a $5.3 million payment to the state and a $16.7 million refund to approximately 177,800 New York investors who used the platform.
Though KuCoin trails behind other exchanges like Binance, Coinbase, and Kraken in factors such as trading volumes, traffic, and liquidity, this resolution could be a turning point in how it carries out its operations moving forward.
A Reminder of the Importance of Legal Counsel
This whole ordeal underscores the crucial need for crypto companies to follow registration and legal processes and for crypto investors to be aware of their rights and possible risks.
Securing an experienced lawyer is paramount, mainly when operating in areas like cryptocurrency, where regulations are becoming more stringent. Appropriate legal counsel can help crypto firms navigate such complex legal landscapes and ensure their operations are compliant.
The rules of cryptocurrency are changing and evolving. Understanding these rules can protect operators and investors alike from unnecessary potential legal troubles. If you are involved in crypto, seek professional legal advice and regularly check local and international regulatory updates.
Get in touch with an experienced lawyer today.
