KuCoin is one of the world’s largest cryptocurrency exchanges.  In March of this year, the New York Attorney General (“AG”) sued KuCoin, accusing it of failing to register with the state before letting investors buy and sell cryptocurrencies on its platform.  According to the AG, an investigator from the AG’s office was able to create an account with KuCoin using a computer with a New York-based IP address to buy and sell cryptocurrencies, including popular tokens like ETH, LUNA, and UST. The Petition alleged that New York law requires securities and commodities brokers providing services in New York to register with the state, which KuCoin failed to do.  By trading cryptocurrencies that are commodities and securities with its New York users, KuCoin violated state law.  In addition, KuCoin claimed to be an exchange, but was not registered with the Securities and Exchange Commission as a national securities exchange or appropriately designated by the Commodity Futures Trading Commission, as is required under New York law.

On December 12, 2012, Ku Coin agreed to a Stipulation and consent order that settled the case.  KuCoin admitted that it operates a cryptocurrency trading platform on which users, including users in New York State, can purchase and sell cryptocurrencies which are securities or commodities as defined under the laws of New York State and that Ku Coin is not registered in New York State as a securities or commodities broker-dealer.  KuCoin also admitted that it represented itself as an “exchange” but was not registered as an exchange pursuant to the laws of New York State.

Ku Coin agreed to terminate access to its services for users in  New York  and will close the relevant accounts of New York users. KuCoin will continue to prohibit the creation of new New York accounts and will restrict access to its platform to existing New York accounts for the sole purpose of withdrawing assets.

As of November 29, 2023, New York customers held assets at KuCoin with an approximate notional value of $16,766,642 worth of fiat and/or cryptocurrencies.  Ku Coin agreed to return these current account balances held by New York customers, who can receive their refund by withdrawing their assets directly from KuCoin over the following 90 days.  Finally, KuCoin agreed to pay a disgorgement fine of $5.3 million to the Office of the AG.

One final point is worthy of note.  When the suit was commenced, the Petition alleged that Ether (ETH), the second-largest cryptocurrency by market capitalization, was a security.  The Stipulation settling the case included a statement that “KuCoin acted as an unregistered securities broker or dealer and commodities broker-dealer by offering, selling, and purchasing securities and commodities, including but not limited to the ETH, LUNA, and UST tokens . . . .”  Notably, there is some ambiguity here as to whether ETH is a security or a commodity.  At the federal level, the CFTC has taken the position that ETH is a commodity, while, as explained in this article from CryptoSlate, the SEC has noticeably refused to say that Ether is not a security (as it has done with Bitcoin).


David Zaslowsky has a degree in computer science and, before going to Yale Law School, was a computer programmer. His practice focuses on international litigation and arbitration. He has been involved in cases in trial and appellate courts across the United States and before arbitral institutions around the world. Many of David’s cases, including some patent cases, have related to technology. David has been included in Chambers for his expertise in international arbitration. He is the editor of the firm's blockchain blog.