manipulating trading volumes, misleading investors, and failing to disclose conflicts of interest. The Attorney General’s office claims that these actions violate New York’s Martin Act, which prohibits fraudulent practices in the sale of securities.
The lawsuit also alleges that KuCoin operated as an unregistered broker-dealer of securities and commodities, which is a violation of the Securities Exchange Act of 1934. The Attorney General’s office claims that KuCoin facilitated the trading of securities without registering with the Securities and Exchange Commission (SEC).
In a statement, Attorney General Letitia James said, “KuCoin operated a virtual currency trading platform that operated outside the bounds of New York law, and defrauded investors in the process. We will not allow unscrupulous actors to take advantage of New York investors, and will continue to take action against those who violate our laws.”
KuCoin has not yet responded to the lawsuit, but the exchange has faced scrutiny in the past. In September 2020, KuCoin suffered a major security breach that resulted in the loss of over $280 million worth of cryptocurrency. The exchange has since recovered most of the stolen funds.
The lawsuit against KuCoin is part of a broader initiative by the Attorney General’s office to combat unregistered cryptocurrency platforms. In February 2021, the office filed a lawsuit against Coinseed, a cryptocurrency trading platform that allegedly defrauded investors out of millions of dollars.
The Attorney General’s office is seeking a court order to stop KuCoin from operating in New York State, as well as restitution for investors who were harmed by the exchange’s alleged fraudulent activities.
