I wonder how much market New York provides KuCoin, but if it isn't that big, if I were KuCoin, I'd rather not go through all the legal hassles and block New York residents from the platform. Surely, KuCoin's market is not solely dependent on New York.
Being one of the top centralized exchanges in the industry they can still do better without New Yorkers they have the data and if NewYork is not their biggest market then they have to let it go, I'm sure the majority of investors are trading on Kucoin, they can always find a new market to explore
On the other hand, is there an official pronouncement or directive from the SEC that Ethereum, among others, is to be classified as securities? For now, it seems everything is but mere interpretations and yet lawsuits are already filed against Kraken, KuCoin, and others on this claim or assumption. Why don't they first let SEC decide on this once and for all and file a case on that basis?
So the case is already in place, in case SEC classified it as securities, prosecutors are like this they preempt before the official ruling of a case so they will just use the official ruling to advance their case, so when SEC rules marked Ethereum and others as securities they use the ruling to strengthen the case.