KuCoin Fined $22 Million: What Happened?

KuCoin, one of the major players in the global cryptocurrency exchange landscape, has found itself in hot water, as it has been fined a hefty $22 million. This financial penalty comes in response to a legal dispute initiated in March, in which the New York State authorities equated cryptocurrencies traded on the exchange, including Ethereum, to securities or "valuable papers."

The $22 million comprises a $5.3 million fine and the return of cryptocurrency worth $16.7 million to 177,800 clients from New York who had accounts on the exchange. This resolution was reported by Reuters, indicating that KuCoin has agreed to block access to its platform for users from the state of New York to settle the legal dispute.

KuCoin is a cryptocurrency exchange registered in the Seychelles. According to CoinGecko, it ranks sixth in terms of daily trading volume, with a staggering daily trading volume exceeding $2 billion. The majority of the exchange's traffic comes from users in the United States, the United Kingdom, and Turkey.

The New York State Attorney General, Letitia James, stated, "Cryptocurrency companies must understand that they must play by the same rules as other financial institutions." This statement underscores the regulatory pressure faced by the cryptocurrency industry.

The lawsuit against KuCoin was filed in March of this year, with prosecutors alleging that the platform violated the law by offering tokens that met the definition of securities without proper registration. This case marked one of the early instances where a regulator equated Ethereum (ETH) with securities.

Prior to this, in February, James had filed a similar lawsuit against the cryptocurrency exchange CoinEx, accusing it of operating without registration with the U.S. Securities and Exchange Commission (SEC) and offering unregistered securities to American clients. CoinEx responded by ceasing to serve U.S. customers and urged them to withdraw their assets.