Nyag claims that Ethereum is a security in a lawsuit against Kucoin

Nyag claims that Ethereum is a security in a lawsuit against Kucoin

The New York Attorney General Letitia James has sued the Kryptocurrency Exchange Kucoin for the sale of goods and securities on its platform without the necessary registration.

One of the "securities" that Kucoin allegedly sold illegally is ether-the second largest cryptocurrency next to Bitcoin.

Ethereum is a security, says Nyag

Pro the complaint kucoin, which was submitted to the top court of the state of New York, sold illegally have (eth) and terrausd (ust) Platform. "The tokens are goods and securities in the sense of Martin Act."

In particular, it is claimed in the submission that the three crypto's investment in common companies, the profits of which mainly come from the efforts of others "-the same criteria for the classification of a securation after the Howey test. />

James argued that the security status of Ether largely related to its relationship to the Creator of Ethereum vital butcherin Organization that is committed to the development of the Ethereum ecosystem. The foundation launched an initial Coin Offering (ICO) in 2014 to finance its company, whereby the participants sold their Bitcoin against the promise of future ether when the network started in 2015.

It is also said that Ether was advertised as an investment directly on the Ethereum Foundation website by claiming that many users "see it as a digital value memory because the creation of new ETH slowed down over time". Since the merger in September, Ether has slowed new creations dramatic, which many inspires to describe it as "ultrasound money".

The merger backfire

But according to Nyag, this upgrade has further established the security status of ether. As she explained, the butterin and the Ethereum Foundation were largely responsible for facilitating the transition from Ethereum to a proof-of-stake consensus mechanism, from which they benefited heavily as an early and large ether owner.

"The changeover to Proof-of-Stake has had a significant impact on the core functionality and incentives for the possession of ETH, since ETH owners can now only benefit from participation in staking", it says in the submission.

The Securities and Exchange Commission (SEC) has in the past various general explanations and indications to point out that ether is a securities, but the complaint from Thursday is the first major charges that are formally brought up.

Sec leader Gary Gensler argues last month that "everything except Bitcoin" probably falls into the responsibility of his authority. In September he claimed that Ethereum Merge may have made his native cryptocurrency more safety-like.

Many in the crypto community do not agree with the allegations of NYAG. Neraj K. Agrawal from the cryptopolitics-think tank Coincentre replied to the news with a previously published series of arguments on this topic-with the assertion that" the value of ether and the functionality of the Ethereum network is not from the [Ethereum] foundation. "

last month Brian Armstrong, CEO from Coinbase, with arguments

The SEC submitted a notification of Wells against Paxos in February because of the edition of its busd stable, which was supposed to be an unregistered securities.