(Bloomberg) -- KuCoin, one of the largest and most popular cryptocurrency exchanges, agreed to pay $22 million in fines and refunds and stop trading in New York to resolve a lawsuit by the state.

Under the settlement, the latest in an aggressive push by New York to help shape the crypto landscape, KuCoin will refund a total of $16.7 million to 177,800 New York investors, on top of paying a $5.3 million fine to the state, New York Attorney General Letitia James said in a statement on Tuesday. 

The payments will resolve claims that KuCoin failed to register as a securities and commodities broker-dealer and falsely represented itself as a crypto exchange, James said.

The settlement comes as state and federal regulators, including the US Securities and Exchange Commission, have increased scrutiny of crypto companies following the collapse of FTX’s trading platform and the resulting industry meltdown. New York in particular has been taking forceful state action.

Investor Risk

“Unregistered offshore crypto platforms pose a risk to investors, consumers and the broader economy,” James said in the statement. “I will continue to take action against any company that brazenly disregards the law and jeopardizes New Yorkers’ savings and investments.”

KuCoin, based in the island nation of Seychelles, allows investors to buy and sell digital assets through its website and app. But it cannot legitimately claim to be an exchange because it isn’t registered with the SEC or properly designated by the Commodity Futures Trading Commission as required under state law, New York alleged in its lawsuit, filed in March in state court.

KuCoin didn’t immediately respond to emails seeking comment on the settlement.

KuCoin is the fourth-largest exchange by spot and derivatives trading volume, according to data from CoinMarketCap. Its KCS, a profit-sharing token used on the exchange, has risen about 30% to $13.43 in the past 24 hours, according to data compiled by CoinGecko. The price has more than doubled in the past month as rising expectations for a US exchange-traded fund that can invest directly in Bitcoin sparked a broad-based rally in smaller, less-known cryptocurrencies.

New York’s Push

The KuCoin suit was filed two weeks after James brought a nearly identical complaint against crypto platform CoinEx. Still another suit, against crypto companies Nexo Inc. and Nexo Capital Inc., resulted in a settlement in January of as much as $24 million for New York and nine other states. 

The KuCoin complaint was among the first in which a state regulator claimed in court that Ether, the second-largest crypto token by value, is a security. Which cryptoassets regulators consider to be securities, and thus subject to prevailing rules and laws and the jurisdiction of the SEC, is the subject of active policy debate and litigation.  

James sued former Celsius Network Ltd. Chief Executive Officer Alex Mashinsky last year for allegedly duping investors out of billions of dollars by lying about the safety of his once high-flying crypto lender. He was later charged with fraud by federal prosecutors.

New York also got $1 million in a settlement with BlockFi Lending LLC over the offering of unregistered securities, part of a wider deal with the SEC and state regulators totaling $100 million. 

KuCoin is required under the deal to take steps to prevent New Yorkers from accessing its platform. It must also cooperate with US law enforcement by responding to requests for information or to freeze assets, James said.

--With assistance from Dave Liedtka.

(Adds paragraph on KuCoin and the altcoin rally in second section.)

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