Based in Seychelles, crypto exchange KuCoin has agreed to end all operations in New York and will settle a lawsuit with the New York Attorney General (NYAG).
The settlement will involve a payment of $22 million due to the sale of unregistered commodities and securities.
The legal filings
According to legal filings, the company will now have to pay $16.7 million worth of refunds to KuCoin users based in New York for crypto transactions.
It will also pay the Office of the Attorney General a further $3.5 million. As per the settlement, the exchange has also admitted that it runs a crypto exchange where users can buy and sell cryptocurrencies.
Under the laws of the state of New York, these cryptocurrencies have been defined as securities and commodities.
Even though the admission is substantial, it is not close to the initial aim of the New York Attorney General when it filed the lawsuit back in March against KuCoin.
The NYAG had filed the case against the crypto exchange to also prove that Ethereum is classified as a security, which was a rather bold accusation.
The settlement
Back in March, the NYAG had proclaimed that it was the first time that a regulator had claimed in court that one of the largest crypto tokens, Ethereum, is a security.
According to the petition, Ethereum is a speculative asset, similar to UST and LUNA, and it provides profits to its holders derived from the efforts of third-party developers.
However, the settlement on Tuesday did not see the KuCoin crypto exchange admit that any crypto token it offered was a security.
The only thing the exchange admitted was that some of the crypto tokens bought and sold on its platform were either commodities or securities.
Nonetheless, KuCoin has still made substantial concessions to put an end to the lawsuit that was filed against it.
Other details
At the time of writing, KuCoin’s platform is no longer accessible to internet users who have an IP address in New York.
The NYAG said that the crypto exchange had more than 177,000 users in New York.
Letitia James, the New York Attorney General, said that crypto companies have to understand that they need to follow the same rules applicable to other financial institutions.
She said that they would continue taking action against any company that violates the law and puts the investments and savings in New York at risk.
For years, New York has had one of the most restrictive crypto policies in the entire country. Various exchanges, including Kraken, had left the state back in 2015.
This was in protest over the BitLicense crypto registration laws that had been called nasty, cruel, and abominable by Kraken.
A similar crypto registration law was passed in California back in October this year and it will go into effect from July 2025.