Cryptocurrency token Ether fell to its lowest in two months on Friday after the New York attorney general labeled it a security, bracketing it with assets such as stocks and bonds and fueling fears of a wider regulatory crackdown.

New York Attorney General Letitia James on Thursday referred to Ether as a security in her lawsuit against KuCoin for failing to register with the state before facilitating cryptocurrency transactions on its platform. KuCoin is one of the biggest cryptocurrency platforms in the United States.

"The situation in Ethereum (the blockchain that underpins Ether) could get real ugly," investment research firm Citron Research tweeted.

The world's second-biggest cryptocurrency token was trading around $1,390, its lowest since January 10.

The "secrets" of the Ethereum network will be unveiled as James builds out her case, Citron said, adding that the network was being controlled by a small group of people "under a guise of decentralization".

The crypto industry and regulators have been in a tussle over the categorization of crypto assets as securities, which would subject digital asset firms to stricter oversight.

(Reporting by Niket Nishant in Bengaluru Editing by Vinay Dwivedi)