Morrison Cohen Files Important Amicus Brief Regarding Whether ETH Is a Security

On May 18, 2023, Morrison Cohen, on behalf of client Paradigm Operations LP, moved for leave to file an amicus curiae brief in an important digital assets case brought by the Office of the New York Attorney General (the “OAG”) against cryptocurrency exchange KuCoin in the Supreme Court of the State of New York, New York County.

In that action, the OAG has alleged that certain cryptocurrency tokens sold and purchased by KuCoin are securities. The amicus focuses on one particular token referenced by the OAG – Ether (“ETH”), a widely used software token that can be used for myriad reasons that have nothing to do with an “investment contract.”

Morrison Cohen’s amicus brief details how ETH tokens themselves cannot be considered securities, and argues that the OAG has made a damaging allegation that ETH is a security against respondents likely to default, without the creators of ETH being present or able to intervene. The amicus further contrasts the OAG’s pronouncement with statements by other regulators that ETH is not a security.

The amicus brief states, “Not only is the OAG’s claim legally deficient, but there will be detrimental policy implications of any finding that ETH is a security, in light of its wide use in the blockchain industry.”

Jason Gottlieb, Michael Mix and Vani Upadhyaya filed the proposed amicus brief, attached, with co-author Rodrigo Seira from Paradigm.