CoinEx, a Hong Kong-based cryptocurrency trading platform, has reached an agreement with the New York Attorney General’s office to pay $1.7 million in restitution and penalties and cease its operations in New York. The settlement comes as a result of a lawsuit filed by the Attorney General’s office in February, which alleged that CoinEx violated the Martin Act by failing to register with the state.
Under the terms of the agreement, $1.1 million will be allocated for refunds to nearly 4,700 New York residents who were affected by CoinEx’s activities. The remaining $600,000 will be paid as penalties to the state. CoinEx, which primarily trades bitcoin (BTC) and the stablecoin USDT, operates as a Tether-based exchange and does not offer trading pairs with USD.
Lawsuit Allegations: Violation of the Martin Act by CoinEx
The Martin Act, enacted in 1921, prohibits the sale or offering for sale of securities without proper registration as a dealer, broker, or salesman. As CoinEx identified itself as an exchange but failed to register with the Commodities Futures Trading Commission or the Securities and Exchange Commission, it was deemed to be in violation of the Act, according to the New York Attorney General’s office.
New York Attorney General Letitia James emphasized the significance of the settlement, stating, “Today’s 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.” The press release from the Attorney General’s office highlighted the intention to hold crypto companies accountable for their actions and ensure the protection of investors.
The settlement with CoinEx is the latest in a series of legal actions undertaken by the New York Attorney General’s office against cryptocurrency-related entities. Earlier this year, the office pursued legal action against KuCoin, another cryptocurrency exchange. Attorney General Letitia James has also expressed plans to introduce legislation to state lawmakers, proposing mandatory audits, submission of financial statements, and enhanced fraud protection measures for crypto firms.
In a statement made in May, Attorney General James expressed concerns about the prevalence of fraud and dysfunction in the cryptocurrency industry, stating, “Rampant fraud and dysfunction have become the hallmarks of cryptocurrency, and it is time to bring law and order to the multi-billion-dollar industry.”
Attorney General’s Call for Law and Order in the Cryptocurrency Industry
The CoinEx settlement serves as a reminder to cryptocurrency companies operating in New York to adhere to the state’s regulations and requirements. It also underscores the determination of the New York Attorney General’s office to enforce compliance and safeguard investors in the rapidly evolving world of digital assets. As the cryptocurrency industry continues to expand, regulatory bodies worldwide are striving to establish frameworks that promote transparency, consumer protection, and the overall stability of the market.