CFTC filed a lawsuit against the cryptocurrency exchange KuCoin simultaneously with the US Department of Justice, drawing attention to the details of Litecoin and Ethereum.
The US Department of Justice (SEC) sued KuCoin on March 26th with charges of breaking banking laws and conducting unregistered money transfer activities. In parallel, the US Commodity Futures Trading Commission (CFTC) also filed a legal complaint against KuCoin and presented a lawsuit.
The detail of Litecoin (LTC) and Ethereum (ETH) in this lawsuit has sparked discussion in the cryptocurrency market. CFTC classified Litecoin and Ethereum as “commodities.” This classification also includes Bitcoin, which was previously recognized as a commodity by the US government.
The CFTC attorneys stated the following:
KuCoin exchange provided services for trading futures, swaps, and leveraged, margined, or financed retail transactions involving commodities such as Bitcoin, Ethereum, and Litecoin. They accepted property for margin and operated a facility.
Opening a new chapter in the long-standing debate over securities and commodities, the CFTC previously defined Ethereum as a commodity.
However, unlike the CFTC, the US Securities and Exchange Commission (SEC) has repeatedly stated that Ethereum is a security. In fact, in its statements against spot Ethereum ETF applications, the SEC implied that Ethereum cannot be involved in the matter due to its security status.
The question of whether a cryptocurrency is a security or a commodity is crucial for various activities, including spot ETF approval. While being categorized as a commodity, like gold and silver, is seen as positive, being classified as a security, like stocks, brings important legal issues.
