KuCoin was accused on March 26 by the Commodities Futures Trading Commission and the U.S. Department of Justice for running a digital assets futures exchange illegally.

Particularly with regard to the jurisdictional limits between the CFTC and the Securities and Exchange Commission (SEC), its sister regulatory organization, the claim brought forth by the CFTC has caused debate.

Pham clarified, "Owning shares is not the same as trading derivatives," voicing worries about the way the CFTC's complaint confused trading with the idea of investment securities. Pham claims that the agency's interpretation may violate existing investor protection rules by interfering with the SEC's power.

The case, according to Pham, "appears to assert that fund shares held by investors—namely, securities—can themselves constitute leveraged trading." She feels this is a mistaken position that confuses the nature of a financial instrument with financial activity and upends the fundamentals of the securities market.

The episode draws attention to the continuous discussion and misunderstanding over the exact legal jurisdiction that cryptocurrencies have in the US.

The SEC and CFTC have already fought over the categorization of certain cryptocurrencies, namely Ether (ETH). SEC Chair Gary Gensler contends that a large number of cryptocurrencies are securities, yet in its most recent accusations, the CFTC classified Ether as a commodity.

In a congressional hearing earlier this month, CFTC Chair Rostin Behnam noted that the discrepancy in opinions demonstrates the precarious regulatory position. Behnam underlined the serious ramifications of the SEC classifying ether as a security, which may possibly place CFTC registrants who list ether futures in violation of SEC rules.