New York State Attorney General Letitia James speaks during a press conference, Sept 8, 2022. (Photo: David Dee Delgado/Getty Images)

A lawsuit against a cryptocurrency exchange by New York State looks a lot more like a referendum on the world's second biggest blockchain, Ethereum.

Why it matters: Ether has a nearly $200 billion market capitalization and something like 400,000 daily users. Its popularity was partly driven by the fact that entrepreneurs had become convinced that the coin had become exempt from securities regulations.

Details: New York Attorney General Letitia James announced a suit against the crypto exchange KuCoin on Thursday, specifically making note of the fact that it's the first such suit alleging that ether is a security.

In the weeds: The complaint takes pains to argue that ether (ETH) is a security under existing law.

Of note: In order to verify that various cryptocurrencies were available in the state on KuCoin, a detective bought and sold digital assets on the platform from within its boundaries.

KuCoin did not immediately respond to a request for comment.

The bottom line: The AG is seeking disgorgement of ill-gotten gains from New Yorkers, injunctive relief and other remedies.

Yes, but: What everyone in the distributed ledger industry will actually be watching is whether or not the court sustains New York's contention that the second largest cryptocurrency in the world should be regulated as a security.

Editor's note: This story has been corrected to state that ethers market capitalization is nearly $200 billion, not $200 million.

Originally posted here:

New York AG goes after the Ethereum blockchain - Axios