Crypto exchange KuCoin has reached a settlement with the State of New York, agreeing to pay $22 million and impose restrictions on New York residents using its platform. The stipulation and consent order, filed in the New York Supreme Court on December 12, outlines the terms of the agreement.
As part of the settlement, KuCoin will return nearly $16.8 million in account balances held by over 177,800 New York investors at the exchange. Additionally, the exchange will pay $5.3 million in fines to the New York Attorney General’s office.
In the order, KuCoin admits that it represented itself as an “exchange” without being registered as one under New York State laws. As part of the settlement, the exchange has agreed to close the accounts of all New York resident users within 120 days. Additionally, it will prevent New York residents from creating new accounts in the future.
To ensure the withdrawal of funds, KuCoin will restrict access to withdrawals within 30 days, allowing users 90 days to withdraw their remaining funds. This move aims to give affected users ample time to transfer their assets to alternative platforms.
Prior to the settlement, KuCoin had already blocked deposits from non-verified accounts and suspended services for these users from July 15 onwards. It was later confirmed that some of these users were residents of New York.
Implications of the financial settlement
For KuCoin, the settlement means a significant financial cost and the loss of access to the New York market. However, it also provides the opportunity to resolve the legal issues surrounding its operation in the state and move forward without the threat of further penalties or legal action.
It’s worth noting that KuCoin is not the first cryptocurrency exchange to face regulatory scrutiny and legal action. In recent years, several exchanges have been targeted by authorities for non-compliance with regulations. This highlights the ongoing challenges facing the cryptocurrency industry as it seeks to establish legitimacy and regulatory compliance. The latest example of this would be Binance which ended up with a fine of $4.3 billion to settle a criminal investigation by the U.S. Department of Justice (DOJ).
