KuCoin, a cryptocurrency exchange, has been sued by New York Attorney General Letitia James for offering, selling and purchasing commodities and securities on its platform without the required registration.

As per the filing, KuCoin illegally sold Ether (ETH), Terra (LUNA), and TerraUSD (UST) on its platform. 

According to the lawsuit, the three cryptocurrencies in question meet the criteria for classification as a security under the Howey Test, as they represent investments of money in common enterprises with profits primarily derived from the efforts of others. "The Tokens are commodities and securities under the Martin Act." James wrote in the filing. 

Ether, which is the second-largest cryptocurrency after Bitcoin, is among the "securities" that KuCoin is accused of unlawfully selling, according to the allegations.

“The shift to proof-of-stake significantly impacted the core functionality and incentives for owning ETH, because ETH holders now can profit merely by participating in staking,” read the filing.