If you didn't know any better, you'd think there was a coordinated attack on the crypto industry going on right now...

To add to the growing list of recent enforcement actions, the New York Attorney General is suing the KuCoin crypto exchange.

What for?

In a statement put out by the Office of the Attorney General (OAG), they're accusing KuCoin of failing to register as a securities and commodities broker-dealer and falsely representing itself as an exchange.

But here's the interesting part...

Not only did the AG call out KuCoin's staking and lending product as well as coins like Terra (LUNA) and TerraUSD (UST), but she even labelled Ethereum as a security!

This action is one of the first times a regulator is claiming in court that ETH, one of the largest cryptocurrencies available, is a security.

And how did they arrive at that conclusion?

The petition argues that ETH, just like LUNA and UST, is a speculative asset that relies on the efforts of third-party developers in order to provide profit to the holders of ETH.

Is ETH actually a security?

Well, it depends who you ask...

Just two days ago, the chairman of the Commodities and Futures Trading Commission said the agency feels strongly that ETH is a commodity and that they have serious legal defenses to support their case.

However, this is in direct opposition to SEC head honcho Gary Gensler. In a recent interview with New York Magazine, he said that everything other than Bitcoin is a security. 

Unsurprisingly, most people in the crypto community are on Ethereum's side.

Here's what Neeraj Agrawal, head of communications at Coin Center had to say:

"Obviously we disagree with the NYAG's argument that ETH is a security. Coin Center will be monitoring the case and if there's an opportunity to weigh in, we will. 

In the mean time, our argument for why ETH is not a security is unchanged."

Moving forward

If regulators come to an agreement that ETH is in fact a security, it would have huge ramifications for the entire crypto industry.

For now, it seems like there's no consensus amongst the different agencies so it will probably be a hotly debated topic over the coming year(s). 

It's been a tumultuous past couple of weeks for the crypto markets with what seems like an endless supply of negative news...

For the first time since mid-January, the price of Bitcoin fell below $20,000 yesterday, reversing a strong uptrend since the beginning of this year.

Here's the list of recent news that we think has had an impact on on the price, possibly causing investors to worry and create selling pressure:

• Silvergate Bank winding down operations and voluntarily liquidating its assets.
• New York suing KuCoin and claiming that ether is an unregistered security.
• The Biden administration wanting to double capital gains and clamping down on crypto wash sales.
• The U.S. Treasury Department proposing a 30% excise tax on crypto mining firms.
• Fed Chair Powell saying that interest rates are "likely to be higher" than previously anticipated.
• The transfer of about 40,000 BTC from U.S. government wallets from the Silk Road seizures, with about 9,861 BTC sent to Coinbase.

The downturn wasn't pretty for traders in the market, causing them to incur over $300M in liquidations in the past 24hrs at the time of writing.

While things may seem grim at the moment, crypto adoption is still very much on an uptrend with about 420 million people in the world owning some form of cryptocurrency.