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Cryptocurrency exchange KuCoin has agreed to pay $22 million in fines and refunds as part of a settlement to resolve a lawsuit brought by the New York Attorney General’s office. As reported by Reuters, the exchange, based in the Seychelles, was accused of operating illegally in New York without proper registration. The lawsuit, filed in March, alleged that KuCoin failed to register before allowing users to trade cryptocurrencies on its platform. KuCoin will exit the New York market.
As part of the settlement, KuCoin will pay a $5.3 million fine to the state of New York. Additionally, the exchange will refund $16.7 million to 177,800 investors in New York who used the platform. KuCoin has also agreed to block all New York-based users from accessing its platform in the future.
2/ Under our agreement, users required to retire from KuCoin will receive an email or SMS in about 10 days and onwards. If you don't receive either of these, you're alright. Rest assured – your asset security is always guaranteed and remains our top priority during this process.
— Johnny_KuCoin (@lyu_johnny) December 12, 2023
CEO Johnny Lyu has officially confirmed that impacted users, specifically those based in New York, will receive communication regarding the settlement in the form of an email or text within the next 10 days.
He wrote on X, “Under our agreement, users required to retire from KuCoin will receive an email or SMS in about 10 days and onwards. If you don’t receive either of these, you’re alright. Rest assured – your asset security is always guaranteed and remains our top priority during this process.”
New York Attorney General Letitia James, who leads the state’s legal efforts, pointed out the importance of regulation and oversight in the cryptocurrency industry. This settlement follows a broader initiative by James to increase regulatory scrutiny in response to recent high-profile collapses and allegations of fraud within the crypto space.
The lawsuit filed in March also claimed that KuCoin allowed investors to buy and sell popular cryptocurrencies like Ethereum (ETH) and Terra (LUNA), treating them as securities and commodities. This marked the first instance where a major cryptocurrency like ETH was officially labeled a security by a regulator.