• Late last week, New York Attorney General Letitia James filed a lawsuit against the KuCoin cryptocurrency exchange for offering unregistered securities in the state.
• The thought of Ethereum getting classified as unregistered securities has been giving most investors sleepless nights.
• As a result, the founder of the crypto-law.us, John E Deaton, filed a class action lawsuit claiming that Ethereum is not a security and has over 1,000 supporters.
NYAG’s Claim That Ethereum (ETH) Is A Security
Late last week, New York Attorney General Letitia James filed a lawsuit against the KuCoin cryptocurrency exchange for offering unregistered securities in the state. This marked the first time that a regulator claimed in court that the second largest digital asset is an unregistered security and sparked fear among investors about potential banking system failure. In response to this, John E Deaton—the founder of Crypto-Law US—filed a class action lawsuit claiming that Ethereum is not a security and now has over 1,000 supporters with 57 from New York.
The Impact Of The NYAG’s Claim On Ethereum
The legal action by NYAG caused immediate panic among investors about potential banking system failure which resulted in Ethereum breaking out of its multi-week logarithmic downtrend to trade around $1,735. Moreover, it created worry within the industry as many successful decentralized applications (Dapps) run on the Ethereum network and could get classified as unregistered securities if NYAG’s claim was successful.
SEC Chair Indicates All Digital Assets Apart From Bitcoin Are Unregistered Securities
United States Securities and Exchange Commission (SEC) chair Jay Clayton recently indicated that all digital assets apart from Bitcoin are unregistered securities which further compounded investor fears about their investments being deemed illegal or unregulated under US law. Attorney General James commented on this saying: “One by one my office is taking action against cryptocurrency companies that are brazenly disregarding our laws and putting investors at risk” and added “Today’s action is the latest in our efforts to rein in shadowy cryptocurrency companies and bring order to the industry”
John E Deaton Files Class Action Suit Against NYAG
In response to these events, John E Deaton filed a class action suit claiming that Ethereum is not an unregistered security but instead „a non-security virtual asset“. He noted: “We have over 1K with approximately 57 New Yorkers” hoping to gain support from more people who want “to speak up against the NYAG’s allegation that ETH is security.“
Conclusion
It remains unclear whether or not John E Deaton’s class action will be successful but his filing indicates how strongly people feel about this issue throughout America and beyond. With so much at stake it will be interesting to see what happens next in terms of regulation within this space as well as how other countries approach similar cases involving cryptocurrencies like Etheruem.