The United States regulators are not looking to slow down in their efforts to regulate the crypto industry according to their standards. The statement is proven true by another recent news that highlights the increased regulatory pressure on the crypto industry.
KuCoin, the fifth largest cryptocurrency exchange in the world by volume, according to data from Coinmarketcap at the time of writing this article, has announced that it is exiting from the New York market and also agreed to pay $22 million in fines to settle the ongoing lawsuit filed by Attorney General of the State of New York Letitia James in March of 2023.
The lawsuit alleged that the KuCoin exchange was operating within the city of New York without registering its operations first with relevant authorities, therefore committing the crime of working in the state as an unlicensed entity offering unregistered securities and commodities to its residents.
According to Reuters, in the report when the lawsuit was first filed, James argued that the cryptocurrency platform violated the Martin Act, a powerful state securities law, by transacting in cryptocurrencies, selling the product KuCoin Earn to generate income for itself and investors, and wrongfully calling itself an exchange.
At that, James also sought a permanent injunction to stop KuCoin from operating in New York until it complied with the law.
What does the Verdict mean for KuCoin?
Under the terms of the agreement, KuCoin will now cease all operations in New York City, which includes blocking access to its platform and facilitating New York users to withdraw their funds.
KuCoin will shut down accounts belonging to New York residents within 120 days and prevent them from opening new accounts in the future. Also, to assist with this transition, withdrawals will initially be accessible for 30 days, followed by a 90-day window for users to withdraw any remaining funds before their accounts become permanently closed.
Also, under the terms of the agreement, the Seychelles-based crypto exchange will pay a total of $16.7 million to affected investors in the state in the form of a refund.
Additionally, they will pay a further $5.3 million fine to the New York authorities. The firm is also ordered to stop trading securities and commodities within the state and extend full cooperation to the US law enforcement authorities to show their compliance.
The recent development of KuCoin’s settlement with US authorities highlights another incident where the US regulators are seeking to send a strong message to the crypto community, which is to absolutely follow the guidelines set by the said authorities to the letter. Otherwise, they may face repercussions like the one KuCoin has faced recently or like those that Binance met just not so long ago.
It will be interesting to see whether KuCoin’s exit from the New York market will have any effect on the rest of the exchange’s operations. For now, one of the most recognized names in the crypto world is continuing its operation in other jurisdictions globally.
Experts remain divided on the potential implications of these types of cases and their aftermath. While some believe that it is a necessary step towards establishing responsible regulations within the industry, others argue that it could stifle innovation and limit investor’s interest in cryptocurrency.
Those who are willing to step into the crypto realm or are already affiliated with it must stay informed about the latest regulatory developments and understand the risks associated with trading unregistered crypto assets. The evolving regulatory landscape necessitates careful consideration and informed decision-making.
