The ongoing legal battle between KuCoin and Sensitrust could potentially set a dangerous precedent for the Ethereum platform. As some experts believe, the plaintiff’s argument that KuCoin should be liable for a hacker’s actions on the Ethereum blockchain could set in motion a legal paradigm shift for the entire Ethereum ecosystem. If the court rules in favor of Sensitrust, it could have far-reaching implications for future blockchain-based projects and could undermine the very core principles of decentralization and distributed consensus. Hence, the outcome of the KuCoin lawsuit will be closely watched by the blockchain community in the coming months.
KuCoin, a cryptocurrency exchange, has been hit with a lawsuit from the New York District Attorney General (NYDA), Letitia James. Two companies running the trading venue in the US, PhoenixFin and Mek Global Limited, were also named in the lawsuit, which accuses KuCoin of offering unregistered securities and commodities in New York. The lawsuit specifically mentions former native token LUNA, algorithmic stablecoin UST, and Ethereum (ETH), the second crypto by market capitalization, but fails to provide details on which tokens fall under the security classification and which are commodities. In addition, KuCoin facilitated access to financial products, such as KuCoin Earn, which the Attorney General argues is illegal. The NYDA is seeking to ban KuCoin from operating in the US and demands a full report on the exchange’s fees received from New Yorkers. As for Ethereum being classified as a security for New York authorities, legal experts suggest the project could face potential short-term negative implications, but long term, Ethereum will likely come out on top.