Empire State Today

AG James Has Recovered More Than $500 Million from Crypto Industry for Violating New York Laws

NEW YORK – New York Attorney General Letitia James on June 15 recovered more than $1.7 million from COINEX (CoinEx) for failing to register as a securities and commodities broker-dealer and for falsely representing itself as a crypto exchange. On June 15 agreement resolves Attorney General James’ lawsuit against CoinEx and requires the company to refund thousands of New York investors more than $1.1 million and pay more than $600,000 in penalties to the state. As part of today’s consent order, CoinEx is banned from offering, selling, or purchasing securities and commodities in New York and is prohibited from making its platform available in the state. In response to Attorney General James’ lawsuit, CoinEx publicly announced that it would withdraw its platform and services from the United States. Attorney General James has worked to increase oversight and regulation of cryptocurrency companies to protect New York investors, and has recovered more than $500 million from the cryptocurrency industry.

“Unregistered crypto platforms pose a risk to investors, consumers, and the broader economy,” said Attorney General James. “ On June 15 agreement should serve as a warning to crypto companies that there are hefty consequences for ignoring New York’s laws. My office will continue to crack down on crypto companies that brazenly disregard the law, mislead investors, and put New Yorkers at risk.”

CoinEx is a Hong Kong-based virtual currency trading platform that allows investors to buy and sell cryptocurrency through its website and mobile app. New York law requires securities and commodities brokers to register with the state, which CoinEx failed to do. An investigator from the Office of the Attorney General (OAG) was able to create an account with CoinEx using a computer with a New York-based IP address to buy and sell digital tokens although CoinEx was not registered with the state.

 On June 15 agreement requires CoinEx to provide full refunds totaling $1,172,971.50 to 4,691 New York investors. Investors can receive their refund in the form of cryptocurrency directly from CoinEx over the next 90 days. After 90 days, eligible investors can receive their refund as U.S. currency from OAG by emailing coinexrefund@ag.ny.gov. Each investor will be refunded the amount of cryptocurrency or the cash equivalent of the cryptocurrency they held in their accounts as of April 25, 2023.

In addition, CoinEx must implement geoblocking to prevent New York IP addresses from accessing their platform. CoinEx is also prohibited from creating any new accounts for U.S. customers and existing U.S. customers can only withdraw their crypto from the platform.

 On June 15 settlement continues Attorney General James’ efforts to enforce New York laws in the cryptocurrency industry. Last month, Attorney General James announced sweeping cryptocurrency legislation that will increase regulations of the cryptocurrency industry to protect New York investors. Also last month, Attorney General James secured $4.3 million from Coin Cafe for failing to register as a commodity broker-dealer and defrauding investors. In March, Attorney General James also brought a lawsuit against KuCoin for failing to register as a securities broker or dealer or commodities broker-dealer with the OAG. In January, Attorney General James and a multistate coalition recovered $24 million from the cryptocurrency platform Nexo for operating illegally. Attorney General James also sued the former CEO of Celsius for defrauding investors and concealing the company’s dire financial condition. In March 2022, Attorney General James issued a taxpayer notice to virtual currency investors and their tax advisors to accurately declare and pay taxes on their virtual investments.

In October 2021, Attorney General James directed unregistered crypto lending platforms to cease operations for not registering with the state. In September 2021, Attorney General James recovered $479.9 million from GTV Media for failing to register cryptocurrency sales. Also in September 2021, Attorney General James secured a $3 million court judgment against Coinseed. In February 2021, Attorney General James required Bitfinex and Tether to end all trading activity in New York and required iFinex and Tether and their related companies to pay $18.5 million in penalties.

Attorney General James urges New Yorkers who have been affected by deceptive conduct in virtual assets markets to report these issues to OAG. Attorney General James also encourages workers in the cryptocurrency industry who may have witnessed misconduct or fraud to file an online whistleblower complaint with her office, which can be done anonymously.

This matter is being handled by Assistant Attorney General Shantelee Christie with assistance from Legal Assistants Charmaine Blake and Edward Jaffe, all of the Investor Protection Bureau and Senior Detective Investigator Brian Metz of the Investigations Division. The Investor Protection Bureau is led by Bureau Chief Shamiso Maswoswe and Deputy Bureau Chief Kenneth Haim and is a part of the Division of Economic Justice which is overseen by Chief Deputy Attorney General Chris D’Angelo and First Deputy Attorney General Jennifer Levy.

Original source can be found here.