KuCoin to exit New York market after $22M lawsuit settlement
KuCoin, one of the world’s leading cryptocurrency exchanges, has agreed to shut down operations in New York and pay $22 million to settle a lawsuit brought by the state to regulate the digital asset landscape.
New York Attorney General Letitia James filed the lawsuit in March 2023, accusing the Seychelles-based crypto exchange of operating illegally by enabling New York investors to buy and sell cryptocurrencies classified as securities by the state, such as ETH and LUNA.
Per the settlement reached on December 12, KuCoin will pay $5.3 million to the state and refund $16.7 million to 177,800 New York investors. The company will also close all accounts of New York residents within 120 days and prevent future access for residents. Access to withdrawals will be restricted for the next 30 days, allowing users 90 days to withdraw their funds.
New York has been one of the most active states in the U.S. in terms of developing crypto regulations. In November, the New York Department of Financial Services released guidance on how firms should list and delist digital assets.
Other crypto firms have also faced scrutiny from the New York Attorney General’s office. In 2021, Bitfinex and Tether settled a two-year dispute for $18.5 million. Meanwhile, Gemini, Genesis and Digital Currency Group were sued in October 2023 for alleged investor fraud.
🚨 NEWS: KuCoin to leave 🇺🇸 New York and pay a $22 million settlement for violating securities laws.
— BlockNews.com (@blocknewsdotcom) December 12, 2023
Regulatory compliance shift
According to data from CoinMarketCap, KuCoin processes over $1 billion in daily volume and has over two million weekly website visits. Despite falling behind Binance, Coinbase and Kraken in traffic, liquidity and trading volumes, it is a significant player in the cryptocurrency market.
Previously, KuCoin was known for not requiring user identification to comply with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations. They only accepted cryptocurrency for deposits and withdrawals, avoiding the need for banking partners. It allowed users from countries without KuCoin licenses to access the exchange anonymously.
1/ I want to update all of you about our latest compliance action. @kucoincom has reached a settlement with the New York Attorney General (NYAG), solidifying our commitment to compliant operations.
— Johnny_KuCoin (@lyu_johnny) December 12, 2023
However, the policy ended on June 28 this year, with KuCoin implementing mandatory KYC for all users. All services for non-verified accounts ceased on July 15, but withdrawals remain open. The settlement confirmed that some of these non-verified users were New York residents.
KuCoin CEO Johnny Lyu announced the settlement on X, saying that users who need to “retire from KuCoin” will receive a message within the coming days. He also advised users to rely on the exchange’s official website for accurate information amid potential rumors.
Angel Marinov is the Managing Editor at Coinlabz. With extensive knowledge of crypto payments and blockchain use cases, Angel is a trusted source of accurate and timely information
