Crypto Trading Platform KuCoin Settles with NYAG for Registration Failures | Practical Law

Crypto Trading Platform KuCoin Settles with NYAG for Registration Failures | Practical Law

New York Attorney General (NYAG) Letitia James entered into a stipulation and consent order with crypto trading platform KuCoin resolving charges that KuCoin failed to register as a securities or commodities broker-dealer with the New York State Attorney General and for falsely representing itself as a crypto exchange despite being unregistered with the SEC or CFTC.

Crypto Trading Platform KuCoin Settles with NYAG for Registration Failures

Practical Law Legal Update w-041-7164 (Approx. 4 pages)

Crypto Trading Platform KuCoin Settles with NYAG for Registration Failures

by Practical Law Finance
Published on 13 Dec 2023 • USA (National/Federal)
New York Attorney General (NYAG) Letitia James entered into a stipulation and consent order with crypto trading platform KuCoin resolving charges that KuCoin failed to register as a securities or commodities broker-dealer with the New York State Attorney General and for falsely representing itself as a crypto exchange despite being unregistered with the SEC or CFTC.
On December 12, 2023, New York Attorney General (NYAG) Letitia James entered into a stipulation and consent order in the Supreme Court of the State of New York with MEK Global Limited and Phoenixfin PTE Limited d/b/a KuCoin (collectively, KuCoin), which operates a cryptocurrency trading platform. The order resolves charges brought by the NYAG against KuCoin for failing to register as a securities or commodities broker-dealer with the NYAG and for falsely representing itself as a cryptocurrency exchange despite being unregistered with the SEC and CFTC (see Legal Update, New York Attorney General Takes Action Against Crypto Platform KuCoin).
According to the order, KuCoin admits that it:
  • Operates a cryptocurrency trading platform on which users, including users in New York State, can purchase and sell cryptocurrencies that are securities or commodities, as defined under the laws of New York State.
  • Is not registered in New York State as a securities or commodities broker-dealer.
  • Represented itself as an "exchange" and was not registered as an exchange pursuant to the laws of New York State.
To resolve the charges, KuCoin will:
  • Terminate access to its services for users in New York State.
  • Return current account balances held by New York customers at KuCoin, worth approximately $16.8 million in fiat and/or cryptocurrency.
  • Close the relevant accounts of New York State users no less than 120 days after the effective date of the order.
  • Continue to prohibit the creation of new New York State accounts.
  • Restrict access to its platform to existing New York State accounts for the sole purpose of withdrawing assets no later than 30 days from the effective date of the order.
  • Pay $5.3 million disgorgement to the NYAG.
The NYAG issued a press release regarding the settlement, noting that NYAG has recovered more than $500 million from predatory cryptocurrency platforms to date.