ETH/USD: Ethereum Labeled a Security in KuCoin Lawsuit Filed by the New York Attorney General

For some time, the question of whether cryptocurrencies can be considered securities has hung over the space. And on Friday, the world's second-largest cryptocurrency was thrust back into the spotlight. This time, however, the case is not against Ethereum, but rather against the world's fourth-largest crypto exchange by volume, which is accused of listing unregistered securities.

What occurred?

KuCoin, one of the largest cryptocurrency exchanges in the world, has been sued by New York Attorney General Letitia James for allegedly offering unregistered securities to users. Additionally, the lawsuit asserts that Ethereum is an unregistered security. The justification for this position is that the development of the network is "driven by a small number of developers" who would profit from an increase in ETH's price. The fact that Ethereum held an Initial Coin Offering (ICO) at launch, accompanied by promotional materials, was also cited as evidence that it should be classified as a security.

Lacking a unified front

While it has been argued that some cryptocurrencies are securities, regulators disagree on which jurisdiction they should fall under. Despite statements made by its officials in 2018, the Securities and Exchange Commission (SEC) believes that Ethereum should be considered a security, whereas another regulator believes that cryptocurrencies are commodities. The Commodity Futures Trading Commission (CFTC) has asserted that the Gary Gensler-led SEC has exceeded its authority by classifying "everything except Bitcoin" as a security.