• The New York Attorney General (NYAG) recently filed a lawsuit against Seychelles-based exchange KuCoin citing concerns over „falsely representing itself as an exchange“.
• The NYAG classified Ethereum, LUNA and TerraUSD (UST) as securities and commodities.
• Coin Center disputes the NYAG’s assessment of Ethereum, arguing that there is a difference between „a token pre-sale and the token itself.“
New York Attorney General Files Against KuCoin
The New York Attorney General (NYAG), Letitia James, recently filed a lawsuit against Seychelles-based exchange KuCoin, citing concerns over „falsely representing itself as an exchange“. The AG added that users could buy and sell „popular virtual currencies, including ETH, LUNA, and TerraUSD (UST), which are securities and commodities.“ This paves the way for Ethereum’s U.S. securities status to be determined in a court of law.
What is the Howey Test?
Applicable securities laws use the Howey Test to determine whether a contract, scheme, or transaction meets the definition of a security. It focuses on resolving if investors paid money in a common enterprise with the expectation of profits from the efforts of others. Although these rules date back to the 1930s, before computers and digital assets, specific cryptocurrencies and Initial Coin Offerings (ICOs) have met this definition according to regulators.
Reactions from Crypto Community
Neeraj Agrawal from Coin Center disagreed with the NYAG’s recent assessment of Ethereum as a security. In support of this view he linked an article arguing that there is a difference between „a token pre-sale and the token itself.“ Lawyer Jake Chervinsky commented that it was one of first times a regulator has claimed in court that ETH was a security. Ryan Selkis hinted at potential coordinated attack on crypto following news about suit being filed by NYAG against Kucoin.
Ethereum Security Status Uncertain
Uncertainty looms over Ethereum’s security status following news about suit being filed by NYAG against Kucoin. If found guilty then it could mean big trouble for cryptocurrency exchanges operating illegally in New York State since they will have to comply with registration requirements under federal or state laws regarding sale or purchase of securities or commodities depending on their jurisdiction .
Conclusion
Despite disagreement from some members within crypto community , Ethereum’s security status remains uncertain pending outcome of case involving Kucoin . Once court decides whether or not ETH is indeed security , then further implications can be drawn upon how it will affect regulation around cryptocurrencies going forward .